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The re-industrialization of the United States of America what does it mean?
There are a number of factors helping the re-industrialization of the United States of America, but the primary one is abundant and cheap energy, especially shale gas and shale oil. ArcelorMittal says that energy prices have declined, all other things being equal, by more than 50% during the last eight years. So, while cheaper energy has obviously played a critical role in the gains US industry has made in terms of competitiveness in recent years, another key factor is the flexibility of the US workforce, which is significantly more flexible than elsewhere.
The roll-out of this re-industrialization is likely to occur in two distinct phases. In the first instance, progress is already noticeable in areas such as heavy industry, the oil and gas industry, refinery processing, in the component manufacturers to the oil industry, and in the car industry. In the second phase, we should start to see increased activity coming through in sectors such as consumer staples and discretionary spending, including the leisure and luxury segments.
The re-industrialization in the US is occurring within a mostly well-balanced and peaceful social-political context and has created many irresistible opportunities, which are rapidly being exploited by companies around the world. A good number of foreign companies active in the US, report US-related sales increases in excess of 50% for the last seven years. The key beneficiaries of the foreign driven investment cycles are European-based companies, which have been investing mainly in Texas, the Midwest, the East coast, as well as Alabama. In general, foreign companies operating in the US, offer high added value products and services, making them particularly attractive from an investment point of view.
Because the investment volume is large and the investment cycle is expected to last for a prolonged period of time, the US’ re-industrialization should provide substantial cash flows and profits. As a result, there is an opportunity for the people of the United States to become less dependent on debt to cover their lifestyles. Dominique Strauss-Kahn, Ex-Director of the IMF, goes one step further; he believes the global economic rebalancing could lead, in time, to a decrease in the predominant role the USD plays in today’s international financial markets.
Taking a broader view, one of the other elements supporting the re-industrialization of the US is the highly efficient manner in which it implements its socio-economic colonialization strategy. This consists mainly of a give and take relationship in which peace and democratic and economic welfare are promoted. However, this process is never long lasting and the endeavors often develop into love-hate relationships as the United States of America try to implement an indoctrinated and ideological relationship
Prime examples include the split in its relationships with Saudi-Arabia and Europe, and on the other hand, recent efforts to re-connect with Iran and Cuba. The broader context behind this evolution is that ever since the first Gulf War, a number of proxy battles have taken place in the Middle East forging new alliances aimed at ring-fencing the lucrative oil business and ultimately ensure the full independence (energy wise) of US industry. The renewed link with Iran aims to stabilize fragile regional powers and provide Israel with some additional breathing room. Lifting the sanctions against Cuba puts some South American leaders such as Morales, Maduro, Ortega, and Santos under pressure to soften their stance in relation to the US. Each of these political developments translates into valuable investment opportunities for US companies.
In another example, imposing sanctions on Russia has had the effect of weakening the European economic system which is a thorn in the side of both the US administration and US industry because the implementation of Europe’s technocratic style governments has not been progressing well enough. These developments have also pushed the Chinese government to consider US consumers’ requirements more than European consumers’.
When looking at these points individually they seem of little importance. But, when considering the interconnections and subsequent monetary and economic flows, it’s easy to see that they all converge towards the United States of America, thereby supporting its re-industrialization. One last point retains our attention and is worthwhile developing: Ever since 2011, the unemployment rate in the USA is declining. The statistics mention that the global job growth between 2002 and now was over 5 %. Yet, the petrochemical sector on its own has created (net) over 6 million new jobs during the same period. It could be well the case that a good number of these jobs get lost in the event oil prices stay for a continued period of time at the present low levels.