Cheap Energy Drives U.S. Manufacturing Renaissance as China's Costs Escalate

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--In a stunning turnaround, both U.S. manufacturers and foreign companies are building new plants in the U.S. due to the country's low energy costs and near-limitless domestic reserves, according to analyst Elliot Gue, writing for Energy & Income Advisor.

Since China must import much of its energy, manufacturing costs there continue to escalate. Meanwhile, the U.S. looks "cheap" to manufacturers who 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, Gue said.

Now 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 (NYSE:DOW) (Midland, Michigan) and other multinational chemical producers are building new plants in the U.S. Mega-steelmaker Severstal (Moscow, Russia) recently expanded its Mississippi and Michigan plants, and Airbus (Toulouse, France) unveiled plans for a giant new factory in Alabama.

This new U.S. manufacturing renaissance will be fueled by the ongoing development of domestic shale plays which, according to the U.S. Energy Information Administration (Washington, D.C.), could contain up to 862 trillion cubic feet of recoverable natural gas. It is projected that lower U.S. energy costs could save manufacturers as much as $12 billion in the next 10 to 12 years, and create as many as 1 million jobs over the same period. For related information, see October 29, 2012, article - U.S. sees Oil Boom Creates Millions of Jobs, Could Become No. 1 Global Producer.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.