Road closed. Detour ahead.
There’s nothing more frustrating on a journey than wasting time and fuel on a detour. Especially when there’s huge sums of money on the line.
Now, imagine taking a detour that doesn’t just take a few minutes or hours… but adds weeks to your trip.
That’s exactly the situation many ships are finding themselves in right now.
Two of the world’s most important sea routes have been severely crippled. The Panama Canal is running low on water because of a drought. Taking the Suez Canal means running the risk of getting attacked by missiles or drones.
The only other options are to sail all the way around Africa or South America.
That’s a really long detour.
But there’s a silver lining… This forced global detour is encouraging companies to move their supply chains back to America in a trend called “reshoring.”
“Reshoring” means moving manufacturing back to the countries where the products are being sold. It gets rid of the problem of having to ship things halfway around the world.
For decades, American businesses have been sending jobs overseas where labor was cheaper. The loss of those jobs hollowed out the middle class and sent parts of the country known today as the “Rust Belt” into decline.
But now, a new wave of manufacturing is coming back to the U.S.
Here at Intelligent Income Daily, we’re focused on finding the safest income investments on the market. Investing in companies that support major trends like reshoring is a good way to get reliable profits.
Today, I’ll share three reasons companies are deciding to bring manufacturing back to America. I’ll also share two ways you can cash in on the trend.
Three Reasons Reshoring Is Ramping Up
Companies are getting serious about bringing manufacturing back to America.
Before the pandemic, management teams mentioned “reshoring” on earnings calls less than four times each quarter.
But now, companies are talking about reshoring more than 200 times each quarter. That’s a 50x increase.
And it’s not just talk. Over the past three years, private companies have announced $640 billion in investments toward manufacturing in America.
According to the non-profit group Reshoring Initiative, over 365,000 jobs were created last year due to companies bringing manufacturing back to America.
In a recent survey from market research consultant Censuswide, 69% of U.S. manufacturers say they’ve begun reshoring their supply chains. And 93% are planning to increase the pace of reshoring over the next two years.
So why are businesses bringing jobs back home?
One major reason is what the pandemic brought to light. It showed how hard it is to rely on producing goods and shipping them halfway around the world. And the recent problems with the Suez and Panama canals show how easily trade can be disrupted…
After seeing their orders delayed for months, companies decided they needed to bring manufacturing closer to where their products were being sold to avoid major disruptions. It allows them to quickly respond to changes in demand.
Another reason is that new, high-tech manufacturing techniques are more efficient. Even though labor costs are higher in America, the technology advantage makes local manufacturing competitive with cheap overseas workers.
Finally, the U.S. government has been encouraging businesses to bring manufacturing back to ensure America stays competitive in key industries like semiconductors and electric vehicles (EVs).
The CHIPS Act provided $39 billion in funding to set up new factories for producing advanced computer chips. And the Inflation Reduction Act gave up to $7,500 in tax credits per EV made in America.
These initiatives and habits show that reshoring is only going to ramp up in the coming years… Meaning there’s an opportunity for long-term profits.
How to Benefit From Production Coming Back to U.S. Shores
One way to play the reshoring trend is by investing in the Tema American Reshoring ETF (RSHO). This exchange-traded fund invests in companies that stand to benefit from manufacturing moving back to the U.S.
Many of the companies in this ETF are involved in constructing new factories and providing the high-tech machinery that will be used to produce goods. So demand for their services will be high as companies continue to invest in reshoring.
And for subscribers of Intelligent Income Investor, our pick for reliable income from America’s transportation king has already returned 31% since we recommended it nine months ago. (Paid subscribers can read that issue here.)
That easily beat the S&P’s 19% return over the same time. We expect this company to benefit from the reshoring trend and grow its earnings at a double-digit rate in for the next couple of years.
We’ll continue tracking this profitable trend and finding new opportunities to earn income from it.
Happy SWAN (sleep well at night) investing,
Editor, Intelligent Income Daily