"The future of manufacturing is in America, not China" declared Vivek Wadhwa in Foreign Policy magazine this week.
Wadhwa argues that technology is going to save the US. In fact, "technical advances will soon lead to the same hollowing out of China's manufacturing industry that they have to US industry over the past two decades".
Robotics is the first saviour. It'll soon be cheaper to build and install robots than to use human labour. As Wadhwa notes, Taiwan-based Foxcomm plans to install one million robots in the next three years. "It has found even low-cost Chinese labour to be too expensive and demanding."
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Meanwhile, advances in artificial intelligence, and 3D printing, will enable non-experts to design and personalise products, then print' them off at home or at local manufacturing hubs.
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Combine all this with the magic of "America's ability to innovate", and the US will be a world leader in manufacturing within the next decade.
It's all very exciting stuff. But there's another big trend with the potential to drive all this that Wadhwa doesn't address. And it's one you can profit from right now
Futuristic technology is very exciting, but cheap gas is more important
Robotics, artificial intelligence and 3D printing are all fascinating topics. And we think there are ways to profit from all of these futuristic technologies. Indeed, in the current issue of MoneyWeek magazine, my colleague James McKeigue looks at how to profit from supermaterials' substitutes for metals and plastics that could vastly improve the efficiency and cost of various products.
However, while the idea of localised factories driving a creative manufacturing renaissance in the States (and presumably in the UK too we're pretty good on the innovation side ourselves) is attractive, we think there's a far more down-to-earth reason for companies to do more business in the US.
It all boils down to the shale gas revolution.
We've written about this revolution' plenty of times in the past. But in short, at the start of this century, the US was looking at becoming a natural gas importer. Now, thanks to the opening up of shale gas fields, some believe the country has nearly a century's worth of gas supplies. It's now looking at exporting the surplus, rather than being forced to import new supplies.
As a result, natural gas prices have plunged. That's meant big shifts in the US energy mix. Gas now provides nearly a quarter of America's electricity, up from a fifth in 2006. Meanwhile, use of coal has dropped. Indeed, as The Economist points out, America's greenhouse gas emissions have fallen by 450 million tonnes over the past five years, "the biggest anywhere in the world".
Last year, accountancy group PricewaterhouseCoopers argued that by 2025, "the manufacturing sector could save $11.5bn in energy costs". The group suggested that as many as a million new US manufacturing jobs could result from cheap gas.
Among the biggest beneficiaries are chemicals companies. Why? Because, as The Economist notes, they use gas "to make chemicals such as methanol and ammonia, a vital ingredient of fertiliser".
As a result, petrochemicals have remained cheap, "even as oil prices have peaked". In turn, cheap petrochemicals mean lower costs for all the other businesses who use them, from car manufacturers to agriculture companies.
So you can see that there's a virtuous circle going on here. The cheap natural gas gives rise to both cheaper energy and cheaper raw materials. As PwC point out, you also have added demand for manufacturers to build products for the gas extraction industries.
How can you profit from shale gas?
What's the best way to profit from all this?
This is where it gets more complicated. Cheap gas is great news for energy users. But it's not so good for gas producers. An inevitable result of natural gas falling in price as far as it has is that it becomes less attractive to keep looking for it.
Indeed, the number of rigs drilling for natural gas is near a 13-year low, according to oil services firm Baker Hughes. So far this has had little impact on prices, as it will take a while for gas output to be affected, mainly because gas is still being produced as a by-product of oil wells.
But in the longer run, if prices don't support production at economic levels, then production will simply have to fall until prices pick up. This suggests that the producers who can survive the hard times might be in the best position to profit when prices recover.
So who might they be? We've invited a group of energy experts in for a Roundtable. They'll be talking about the prospects for both fossil fuels and renewables, as well as giving their top tips. Last year one of them picked a small oil explorer, Africa Oil, which has since more than quadrupled in value. So it's worth finding out what they've got to say for themselves this year. If you're not already a subscriber, you can claim your first three issues free here).
If you don't want to wait until then, my colleague David Stevenson has been looking into the natural gas business for his Fleet Street Letter subscribers. His favourite play in the sector is a major player in the industry, with a very attractive dividend yield of more than 6%.
This article is taken from the free investment email Money Morning. Sign up to Money Morning here .
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