After decades of sending jobs overseas, America is seeing a sudden boom in manufacturing.
Toyota is building a $5.9 billion battery plant in North Carolina.
Hyundai and LG are adding a $4.3 billion factory in Georgia.
Ford is putting $3.5 billion towards making electric vehicle batteries in Michigan.
Intel is building semiconductor plants worth $20 billion each in Arizona and Ohio.
Micron is spending $35 billion to put up factories making computer memory chips in Idaho and New York.
Texas Instruments is adding an $11 billion chip facility in Utah.
Even in my hometown of Spartanburg, South Carolina, BMW is investing $1 billion to produce electric vehicles. And just a few miles to the south in Woodruff, a new battery plant is going up.
New factories are popping up all over the country.
Today I’ll show you why manufacturing is coming back to the U.S. Plus, I’ll give one way to profit from this trend.
Why Manufacturing is Coming Back to the U.S.
For decades, companies used “offshoring” to reduce the cost of producing their goods by sending manufacturing jobs overseas to countries where labor was cheap.
But recently, they’ve been doing the opposite – bringing manufacturing back home in a trend known as “reshoring.”
Data from research firm IOT Analytics shows that mentions of “reshoring” in recent earnings reports increased by 30%.
Several factors are encouraging companies to reshore production.
The global pandemic increased the value of local economies for companies and customers.
Companies realized they needed more reliable supply chains.
Many items went out of stock as companies were stuck waiting for months for products to be shipped during the pandemic.
Having a local factory allows companies to respond more quickly to changes in demand.
Meanwhile, customers are now more willing to pay up for timely, higher quality, sustainable goods.
They also want to support their local economy after seeing their favorite shops and restaurants go out of business during the pandemic.
Last but not least, reshoring is also accelerating because of large government incentive programs.
The CHIPS and Science Act provides $280 billion to boost research and manufacturing of semiconductors. And the Inflation Reduction Act offers tax credits worth $7,500 per electric vehicle – as long as it’s made in America.
This has led to a big increase in new factories. Since the pandemic, spending on building new manufacturing facilities has nearly tripled.
And you can profit from this manufacturing boom by investing in warehouses.
How You Can Profit from America’s Manufacturing Boom
The large increase in factories means more warehouses are needed to store raw materials and finished products.
A report from the real estate services firm Cushman-Wakefield shows that the asking rent for warehouses reached $9.59 per square foot this year. That’s a more than 50% increase compared to rents just three years ago. And rents are expected to continue climbing to more than $10 per square foot next year.
One way to add warehouses to your portfolio is through Rexford Industrial Realty (REXR). Rexford owns 365 properties covering 44 million square feet of space in Southern California.
This is the country’s largest industrial market with high demand for warehouse space near the Port of Los Angeles.
And since most of the land has already been developed, there is little to no new supply of warehouse space.
Shares of Rexford have sold off due to worries about the economy slowing down. But the trend of reshoring will continue playing out for many years to come as well as the increased demand for warehouse space.
Rexford yields 2.9% and trades at 24 times cash flow. That’s a 15% discount to its historical average, making it a good opportunity to buy shares right now.
And for members of my Intelligent Income Investor service, there’s an even better company for playing the growing demand for warehouse space. It’s a company that’s a leader not just in America, but all around the world.
It’s a company that’s making massive profits from the success of Amazon. And it can give you a reliable stream of growing income. In fact, I call it “Amazon’s Secret Royalty Program.”
To find out more, read on here.
Happy SWAN (sleep well at night) investing,
Editor, Intelligent Income Daily