U.S. Luring Manufacturers Away From China?

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Elliott Gue

By Elliott Gue
Energy & Income Advisor

In a stunning turnaround, manufacturers here and abroad are building new plants in the U.S. due to America’s low energy costs and near-limitless domestic reserves. Since China must import much of its energy, manufacturing costs there continue to escalate.

Meanwhile, the U.S. looks “cheap” to manufacturers that are building energy-efficient plants fired by our low-cost natural gas. Recent shale oil and gas discoveries in the U.S. have sent natural gas prices to the floor, while natural gas costs in countries around the globe are up to three times higher.

And manufacturers are waking up to the fact that U.S. energy production costs are now lower than anywhere else. After years of shifting their operations to Asia, Dow Chemical and other multinational chemical producers are building new plants in the U.S. Mega steelmaker Severstal recently expanded its Mississippi and Michigan plants and Airbus unveiled plans for a giant new factory in Alabama.

This new American manufacturing renaissance will be fueled by the ongoing development of domestic shale plays, which, according to estimates from the Energy Information Administration, could contain up to 862 trillion cubic feet of recoverable natural gas.

It’s projected that lower U.S. energy costs could save manufacturers as much as $12 billion in the next 10-12 years — and create as many as 1 million jobs in 12 years.

 

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