How To Invest For Jobs Coming Back To U.S.

Brian Sozzi, Contributor   2/16/2012

The grand theme I want to put on the table is the concept of onshoring, sometimes called reshoring, which is the bringing back of U.S. jobs from overseas supply chains.

U.S. businesses have started to realize that while workers in far away lands garner miniscule wages compared to their U.S. counterparts, having operations outside of the country can be a strategic disadvantage.  The speed and structure in which information is consumed has caused U.S. consumers to demand top quality products and to want to buy them whenever they please.

Having a manufacturing plant domestically aids in the quicker movement of goods from design table to sales floor.  Furniture maker Ethan Allen is great example of a manufacturer producing most of its products in the U.S. and doing customization for clients, setting itself apart from price-point focused competitors.

Corporate managers are simply getting over their infatuation with cheap international labor and analyzing the total costs of doing business in the U.S. compared to say, China or India.

There is a dollop of icing on the cake here as well.  The topic of focusing on onshoring to boost employment levels seems to be an area of agreement between bickering Republicans and Democrats.  Republican presidential hopeful Rick Santorum, for example, wants to zero out the U.S. corporate tax for manufacturers.

Anytime the major political parties agree on anything, even the slight thing, it’s cause to sit up and take notice from an investment standpoint.  The Donkeys and Elephants may be a little apart on how to precisely shepherd along the corporate onshoring interest, but at least they are talking the same language.  It’s high time they do find common ground if the following is to be reversed:

  • Manufacturing employment has fallen by approximately 37% since 1980.
  • According to a survey done by the Manufacturing Institute and Deloitte, some 600,000 manufacturing jobs are currently unfilled due to a mismatch between job requirements and experience.

I have read a fair number of columns bantering about onshoring.  Is it overhyped?  Do we really need more jobs in the service sector U.S. economy?  The debates are almost endless.  Unfortunately, though, I have failed to stumble upon investment strategies to profit from onshoring, which has already begun to a certain extent, and could likely gain steam in the years ahead.

Buy-and-hold investors, this should be right in your wheelhouse: a highly probable future event to build positions around in companies with durable competitive advantages.

A few names that come to mind:

  • Waste Management: Owns 260 plus landfills and is the largest waste management business in the U.S.  More manufacturing production means more waste to be piled into the company’s green bins.
  • ADP: Benefits in two manners.  First, workers are hired to run new domestic manufacturing plants (hopefully by people that used the downturn to attain new technological skills).  Second, there should be a trickle down effect in the overall employment sector via a ramp in higher paying manufacturing jobs.
  • Dunkin Brands: “America Runs on Dunkin” as the brand’s slogan goes.  The company’s moat is not as wide as an ADP or Waste Management, but more U.S. manufacturers should mean more egg sandwiches (which Starbucks does not do superbly) and coffee.  Store penetration is increasing in areas of the country that are manufacturing oriented.

FOX23 Special Report: The Made in America Movement & Made in the U.S.A.

Reported by: Adam Paluka   Published: 2/06 8:03 pm

Buy American and you help the economy. That is an old adage that is getting new life thanks to a movement to build homes across the nation using more products with the “Made in the U.S.A.” label.

If you were to drive around Tulsa, chances are you’ll pass a home built by Bill Rhees. He’s been making blueprints a reality for almost 50 years with his son, and Partner, Phil Rhees.

Together they run BMI Construction. Right now, they’re working on a $5 million home near 111th and Yale in south Tulsa.

“This house we started about three and a half years ago,” Phil told FOX23.

2008 was a time when no one was thinking about a “Made in America Movement“. It never came up with buyers.

“Never, never. They just assumed, and I’ve been amazed myself how many of the products we put in these houses come from overseas,” Bill said.

It never came up when they discussed what lumber, stones, and drywall to buy.

“We don’t know exactly where every individual product came from,” Phil explained.

Phil said last month that is changing, “We really do want to make a effort to make this happen.”

The “Made in America Movement” is simple, encourage builders across the country to use just five percent more made in American products during construction. It’s not the brain child of the feds, a housing agency, or politician, rather it began as a dream by on builder in Montana.

If every builder in the country buys in, Paul Kane with the Tulsa Home Builders Association said, “They’re going to create anywhere to 220,000 to 250,000 jobs nationwide.”

Phil is up for the challenge.

“I believe that we could easily use five percent more,” he said.

Easy because it could take just a few phone calls to get everything with a Made in the U.S.A. sticker.

“You need to spend some time on the phone with the suppliers to find out where these products are coming from,” Phil said.

Often, its overseas, but if you were to look hard enough, the movement’s believers say you’ll not only find all elements of home construction made in the U.S.A., but some made right here in Oklahoma.
Products like York HVACs systems made in Norman.

“If there’s a buy Oklahoma or buy American movement that would be exciting to everyone in this building,” Vicki Davis, who works for York’s parent company Johnson Controls, said.

Their facility is a world of machines, robots, assembly lines, and hard working Oklahomans.
Around 750 people get a paycheck at the plant.

“We offer the higher quality, and that’s what we sell our products on. It’s not that we build the cheapest, but it’s that we build the highest quality,” Davis told FOX23.

Should the buy American dream become a reality Davis would be excited.

“If we pick up five or ten percent (new orders), then we’re going to add anywhere from 150 to 200 jobs here in the Norman plant.”

Cost could be a factor, if made in America means your wallet takes a beating this might not work.

“A lot of it has to do with price. We have to be price conscious for our clients,” Phil said,

If the price increase to buy American made is slight, BMI Construction is ready to get on board

“It is going to happen, once we start getting the word out. It’s going to happen, just watch it,” Bill Rhees said.

Now, it’s all about getting the word out.

“If we were unaware as builders, just think what the general public is going to be thinking. They’re going to say, ‘My gosh, I never realized this.’”

Supporters of the movement tell me the Americans build 1.4 million homes each year. They say if builders reallocate 5% of their construction spending to American made products, this would add roughly $10 billion to America’s Gross Domestic Product.

Join the Made in America Movement, sponsored in part by Made in USA Certified.

Copyright 2012 Newport Television LLC All rights reserved.

Made in USA: 30 Day Journey

"We're willing to DIE for our country, but are we willing to BUY for it?"

"We're willing to DIE for our country, but are we willing to BUY for it?"

Josh Miller of ‘Made in USA: 30 Day Journey‘ is asking us one simple question.

“We’re willing to DIE for our country, but are we willing to BUY for it?”

Josh and his film crew will set out on a journey in which he will live off USA made products for 30 days. During his travels, he will speak and interview business-owners, homeowners, politicians, economists and American consumers to find out, among other things, what ‘Made in America’ means to them.  We will help Josh and his crew verify the made in USA claim with the help and support of Made in USA Certified.

Their goal is to raise $5,000 for the film during this campaign.  A $10 donation will get your name in the rolling credits of the film under “Minutemen”.  How cool will that be!

We believe Josh and his crew are a part of the Made In America Movement.  This film will help gain more exposure for this Movement.  This is why we are asking for your support.

Diane Sawyer & David Muir of World News with Diane Sawyer made everyone across the nation aware of this Movement last year with their ‘Made in America’ segments on ABC News, asking you all if you are “IN”.  Now we are asking you, are you in?

Let’s help Josh Miller on his journey.  Go to the link below. Donate your $10 (or more!) and let them know you are a proud supporter of the Made in America Movement.  Your support and donations really do matter!

Made in USA: 30 day Journey donation page I’M IN!

In China, Human Costs Are Built Into an iPad

An explosion last May at a Foxconn factory in Chengdu, China, killed four people and injured 18. It built iPads.

An explosion last May at a Foxconn factory in Chengdu, China, killed four people and injured 18. It built iPads. (Color China Photo, via Associated Press)

By NYT   and   Published: January 25, 2012

The explosion ripped through Building A5 on a Friday evening last May, an eruption of fire and noise that twisted metal pipes as if they were discarded straws.

When workers in the cafeteria ran outside, they saw black smoke pouring from shattered windows. It came from the area where employees polished thousands of iPad cases a day.

Two people were killed immediately, and over a dozen others hurt. As the injured were rushed into ambulances, one in particular stood out. His features had been smeared by the blast, scrubbed by heat and violence until a mat of red and black had replaced his mouth and nose.

“Are you Lai Xiaodong’s father?” a caller asked when the phone rang at Mr. Lai’s childhood home. Six months earlier, the 22-year-old had moved to Chengdu, in southwest China, to become one of the millions of human cogs powering the largest, fastest and most sophisticated manufacturing system on earth. That system has made it possible for Apple and hundreds of other companies to build devices almost as quickly as they can be dreamed up.

“He’s in trouble,” the caller told Mr. Lai’s father. “Get to the hospital as soon as possible.” Read more of this post

Come On, China, Buy Our Stuff!

A Gap Inc. store in Shanghai, China.

A Gap Inc. store in Shanghai, China.

By NYT ADAM DAVIDSON    Published: January 25, 2012

The first time I visited China, in 2005, an American businessman living there told me that the country was so huge and was changing so fast that everything you heard about it was true, and so was the opposite. That still seems to be the case. China is the fastest-growing consumer market in the world, and American companies have made billions there. At the same time, Chinese consumers aren’t spending nearly as much as American companies had hoped. China has simultaneously become the greatest boon and the biggest disappointment.

It wasn’t supposed to be this way. In 2000, the United States forged its current economic relationship with China by permanently granting it most-favored-nation trade status and, eventually, helping the country enter the World Trade Organization. The unspoken deal, though, went something like this: China could make a lot of cheap goods, which would benefit U.S. consumers, even if it cost the country countless low-end manufacturing jobs. And rather than, say, fight for an extra bit of market share in Chicago, American multinationals could offset any losses because of competition by entering a country with more than a billion people — including the fastest-growing middle class in history — just about to buy their first refrigerators, TVs and cars. It was as if the United States added a magical 51st state, one that was bigger and grew faster than all the others. We would all be better off.

More than a decade later, many are waiting for the payoff. Certainly, lots of American companies have made money, but many actual workers have paid a real price. What went wrong? In part, American businesses assumed that a wealthier China would look like, well, America, says Paul French, a longtime Shanghai-based analyst with Access Asia-Mintel. He notes that Chinese consumers have spent far less than expected, and the money they do spend is less likely to be spent on American goods. Read more of this post

State Of The Union Speech Text 2012

Below, Obama’s prepared remarks as released by the White House.

As Prepared for Delivery –Mr. Speaker, Mr. Vice President, members of Congress, distinguished guests, and fellow Americans:

Last month, I went to Andrews Air Force Base and welcomed home some of our last troops to serve in Iraq. Together, we offered a final, proud salute to the colors under which more than a million of our fellow citizens fought — and several thousand gave their lives.

We gather tonight knowing that this generation of heroes has made the United States safer and more respected around the world. For the first time in nine years, there are no Americans fighting in Iraq. For the first time in two decades, Osama bin Laden is not a threat to this country. Most of al Qaeda’s top lieutenants have been defeated. The Taliban’s momentum has been broken, and some troops in Afghanistan have begun to come home. Read more of this post

The State of the Union 2012

Watch it here tonight at 9PM ET.  State of The Union Address

“On Tuesday night, I’m going to talk about how we’ll get there. American Manufacturing – with more good jobs and more products stamped with Made in America. American Energy – fueled by homegrown and alternative energy sources. Skills for American Workers – getting people the education and training they need so they’re ready to take on the jobs of today and tomorrow. And most importantly, a Return to American Values – of fairness for all, and responsibility from all.” – POTUS

Kudos to President Obama for promoting manufacturing.  As Scott Paul said in a recent Huffington Post op-ed “now is the ideal time for the president to promote manufacturing: “If the president really wants to see “Made in America” stamped on products shipped all over the world, he needs to be bold. We’ll be watching. And so will voters.”

Will you be watching?

Documents Shift Attention to Manufacturer in Drywall Case

Wall Street Journal

By ROBBIE WHELAN

Documents released late last week in ongoing litigation related to defective Chinese drywall is shifting more attention to the role played by one Chinese manufacturer, Knauf Plasterboard Tianjin Co., and its German affiliate.

The documents came to light during the pre-trial phase of a class action suit brought by 152 Florida homeowners against builders, installers and suppliers of Chinese-made drywall. KPT is one of several companies in China that exported millions of square feet of drywall to the U.S. during the housing boom, and have since been flooded with complaints that the drywall emits sulfurous odors, corrodes electrical wiring and causes respiratory problems.

Although KPT isn’t specifically named as a defendant in the suit, one of its suppliers, Banner Supply Co., is named. On Friday, a Miami-Dade circuit court judge unsealed a 2007 confidential settlement agreement where KPT agreed to pay Banner $557,000 to replace defective drywall with the condition that Banner “not make statements regarding any perceived or actual smell or health risks relating to Knauf Tianjin plasterboard,” to any firm, person, or news media outlet.

Attorney Victor Diaz, who represents the 153 Florida homeowners, says the disclosure shows that KPT was aware of the problem and concerned about the potential fallout. “We can demonstrate a concerted effort to conceal knowledge of this defect from the general public,” he said.

Donald J. Hayden, a partner with Baker & McKenzie LLC, a firm that represents KPT, declined to comment about the agreement except to say “the document speaks for itself, and we have not objected to its release.”

Other documents released earlier in the week appear to establish a closer link between KPT and its German affiliate than the two companies have contended. In a series of 17 email messages from 2006, released by Mr. Diaz, an employee at Knauf Gips KG in Germany, KPT in China and several U.S.-based customers discuss the mounting complaints about the drywall.

In one email, a KPT employee in China worries that “the situation … is out of [the distributor’s] control, it will be a big problem not only in Miami but all over the USA market, maybe cover thousand [sic] of houses.”

In response, Hans-Ulrich Hummel, head of research and development for Knauf in Germany, writes to an employee at Banner Supply, “Of course I am aware of big problems with Knauf boards from China,” and describes measures he has taken to investigate the reports of odors being emitted by KPT boards using gas chromatography.

The emails are important because KPT and Knauf Gips have long maintained that they are independent companies and therefore Knauf Germany couldn’t be held legally liable for defective products made by the Chinese company. But if the German company controls the Chinese company, as plaintiffs lawyers argue, that could make it easier for plaintiffs to collect on a judgment against the drywall maker.

Alan M. Dunn, an international trade lawyer and former Assistant Secretary of Commerce, said it would be difficult for U.S. homeowners to win compensation in a Chinese court. “But it’s conceivable that aggrieved parties, aggrieved by the manufacturers of the Chinese drywall, might find it to be the best route to go after the German parent,” Mr. Dunn said.

The U.S. Consumer Product Safety Commission has received nearly 3,300 complaints about defective Chinese drywall. So far, studies produced by state and federal agencies have found no link between the drywall and serious health problems.

Nonetheless, KPT has faced a raft of lawsuits in Florida and Louisiana from homeowners and builders seeking damages to cover removing and replacing the Chinese wallboards—which are used to build ceilings and interior walls.

One federal lawsuit in the Eastern District of Louisiana includes more than 7,000 claims from homeowners and builders, and on the other side of it are more than 800 defendants, including KPT. The scope of the replacement of drywall is also at issue in the federal court. Drywall manufacturers have argued that minimal replacements are necessary, while a judge ordered the homes be gutted, and all the drywall replaced.

Last month, KPT reached a small cash settlement with builder Beazer Homes USA over a handful of homes with tainted drywall in Florida.

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