U.S. luring manufacturers away from China?

In a turnaround, manufacturers in the U.S. and abroad are building new plants in the U.S. because of low energy costs and near-limitless domestic reserves in the U.S., said Elliot Gue, energy and income advisor.

Because 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 low-cost natural gas from the U.S.  

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. 

Manufacturers are waking up: U.S. energy production costs are 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 U.S. manufacturing renaissance will be fueled by the ongoing development of domestic shale plays, which, according to Energy Information Administration estimates, 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 to 12 years and create as many as 1 million jobs in 12 years.

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