Economic Growth Potential Part 1: American Manufacturing

It's easy to get caught up trying to figure out where the market as a whole is going to move in the future, which I can already tell you is likely up some and down some. As someone who is generally not equipped or trained in playing short term gains, I invest with the belief that I likely won't need to check how my stocks are doing every day. This gives me the benefit of not worrying too much about the direction of the market as a whole, unless we are talking a large scale movement down like a recession.

So, its worthwhile for me to focus on specific industries or areas of growth in the upcoming future, to help narrow my focus on companies that have even larger potential than their numbers show. The benefits being, when these industries start to really pick up, I am already sitting on some top stocks that will benefit. So here is my first pick for an emerging growth area.

American Manufacturing

 So, you may be ready to hit the back button to get distance yourself from my blog and I understand, the last 2 decades have not been kind to American manufacturing. We possess an expensive labor force, strict government regulation and face cheap foreign manufacturing. That being said, there are a number factors that lead me to believe that the decline is done and a bright future exists.

America has the benefit of being a country that contains expansive amounts of natural resources, especially oils and minerals. American mining has seen large growth in the last decade, including a 67% percent increase in employment, with global exploration spending down from 20% in 1993 to just 8% today. Just listen to this video for a brief summary

Having a stockpile of natural resources, strong transportation infrastructure (which much of Africa and Asia do not) and a history of manufacturing quality will make it much more attractive for companies to start returning their manufacturing to the United States.

Another key aspect of why I believe American Manufacturing will see large growth in the next decade is the advancements in manufacturing technology. Everyone has seen the Lexus commercials so that show up the mechanical arms that can basically create the cars and these technologies are only getting better. I believe components such as 3D Printing and advanced computing will allow manufacturers to remove labor from a lob of the components that now require it, by computer crafting most of the components. This will reduce the amount of manual labor needed, but also provide a large number of specialized workers that will require specialized computer skills. The days of the union Joe who crafted great cars by hands is still likely soon to be over, but it makes sense to have American workers doing the more specialized work without paying the shipping costs. Automation, the fear of the blue collar work force, may be the key in what brings a lot of the factories and work back to America.

Last but not least, I believe American companies are starting to really feel the heat from their foreign production. Its hard for them to control the plants they are working with and we have seen tons of negative publicity about labor conditions. Companies who still produce in America proudly show their "made in america" labels and I think this will not change. With labor rates rising in places like China, Vietnam and India, it will make sense once automation is more realistic, to move these jobs back.. Also, with college getting more expensive, a lot of young people might instead choose to try and make a career in something like manufacturing that doesn't require a degree for entry.

Some stocks I like who might benefit from this trend:
UTX:Make a lot of things like elevators, escalators and some aerospace components. Would benefit from automation. They would help supply elements for factories and new buildings.
DDD: Already one of my favorite stocks. Their technology could be a huge part of the development of American Manufacturing automation and efficiency.
AXL: Master of Drivetrain systems, which include commercial and large scale freight. More manufacturing means more trucks and transportation.