America The Competitive

Change tends to surface gradually as many small indicators gather momentum to alter the big picture. Successful investing can benefit from an ability to “read the tea leaves” at the earliest possible time and then formulate a strategy that exploits anticipated changes.

Much has been written about offshoring, job losses and domestic wage pressures. However, there is increasing evidence that the U.S. is becoming more competitive. Witness the number automobile assembly and manufacturing plants, already located in the U.S. but owned by overseas based companies.

A more recent positive sign is Whirlpool’s decision to move some of its washing machine production from Mexico to a plant in Clyde, Ohio. This will increase employment at Clyde by 80-100 jobs at a wage rate approximating $18-19.00 per hour, some five times the rate at the company’s Monterrey, Mexico facility.

A few days ago, an article in The Wall Street Journal highlighted a significant shift in textile jobs to the U.S. south from India and China. The article suggested that the primary driver of this change was lower energy and other costs, which more than offset the differences in wages.

While the foregoing may be small examples, it is clear that any shift in relative costs is likely to further slow offshoring and may gradually increase domestic employment. All of which should have a salutary affect on U.S. employment, wages and the economy.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA