Harriet Davies
Editor - Family Wealth Report
20 June 2012
Fund Focus
A manufacturing resurgence in the US could boost the performance of the country’s small and midsize industrial suppliers and distributors, according to a white paper from The Boston Company Asset Management.
"We see the list of winners encompassing components suppliers, transportation companies and raw material producers," said Bart Grenier, chief executive and chief investment officer of The Boston Company. "The most attractive beneficiaries may not be the most obvious. In addition to the direct beneficiaries, we see benefits accruing to retailers, banks and others that serve regions where manufacturing activity increases."
Looked at from another perspective for wealth managers, this could also signify more growth of wealth in the northeastern US.
Gradual changes occurring over the past decade have made the country’s manufacturing sector more competitive, the white paper says. These include a weakening dollar, narrowing wage differentials between the US and other manufacturing economies, declining natural gas prices in the US, and increasing costs and slower speeds of global supply chains.
February 2012 marked the first time since the 1980s when manufacturing employment grew faster than the non-manufacturing payroll, the white paper points out.
“While large multinational companies are likely to allocate greater production to the US because of these favorable trends, the smaller US-based operations that supply these larger manufacturing complexes are likely to grow faster,” said the report.
However, it also noted that a number of events could stall this trend, such as an appreciation in the US dollar or a change in the natural gas price, bringing it more in line with the price in other manufacturing economies.
