| Will This Be Death for China? | ||
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Let's face it... We are our own worst enemy.
To anybody even remotely familiar with American history post-World War II, the following extremely bare-bones summary should be review.
The U.S. emerged from World War II as the only major global power with an intact industrial base.
12 million GIs came back from the war and either went to school or to work building that modern industry.
While the rest of the world rebuilt itself, the U.S. either financed the process or provided materials, or both.
By 1960, almost 40% of Americans worked in factories, as American industry came to supply close to 75% of the world's manufactured goods.
As quality of life and the demand for more affordable consumer goods increased, pressure to lower production costs led major corporations to outsource labor.
Slowly but surely, manufacturing waned as more corporations sent their production overseas, while the service industry ate up more and more of the workforce.
 Those of us old enough to remember when this trend took hold also remember everything that came after.
With the decline of American manufacturing, so went the American middle class... and with it, most of what was once known as classic American values.
The concepts of affordable, quality housing, affordable, quality education, and fair compensation for labor performed quickly melted away as jobs once vital to the economy became devalued.
Economic disenfranchisement led to social instability, while the rapidly rising financial industry created larger-than-ever incentives for corporations and their shareholders to seek out the cheapest labor possible.
The rich got richer than ever.
By the turn of the 21st century, more than two-thirds of Americans worked in the service industry — a place where lifelong careers and healthy, well-funded retirements were only available to the management class.
And today, here we are... The middle class continues to shrink, leaving a tiny group of asset owners at the top, and an increasingly poor, increasingly frustrated foundation reluctantly holding everything up.
Our Loss Is Their Gain
In the meantime, countries like India and China — by no coincidence two of the most active recipients of foreign labor demand — have watched their own economies go through unprecedented growth spurts.
They watched their societies modernize, with hundreds of millions of citizens from both nations transitioning from pre-electric to modern, urban living.
It was the same transformation the U.S. took more than a century to make, completed in less than two decades.
And yes, it was all powered by the exact same force that took the U.S. from a second-tier world power before World War II to the unquestioned military and industrial leader in the decades after: manufacturing.
Unfortunately, we're the ones who had to pay for that growth and modernization, and we continue to pay right to this day.
While they prosper, our own nation reels from the secondary effects of an ongoing war with unemployment and (more relevant these days) underemployment, massive increases in private and public debt, all framed by a shrinking spectrum of options for those anticipating entry into the workforce in the coming years.
When you look at all the modern-day ills these days, it all goes right back to the basic lack of opportunity.
That, combined with the ever-widening wealth gap and the lashing-out we see across our sensation-loving media outlets, can be at least understood, if not condoned.
What it cannot be, it seems, is stopped.
Or can it?
All things related to economy and society are cyclical in nature.The Pendulum Is Already Swinging
Just as India and China became the new frontier for corporate labor outsourcing decades ago, so now are those two nations seeking their own cheaper labor.
They're finding new places with backwards, poor populations to use for work that nobody in the new Chinese and Indian economies wants to do anymore.
They are, just as we once were, becoming the victims of their own success.
But where does that leave us?
Well, it leaves us with the same choice that this country has faced since its very inception: innovate or die.
Right now, the call for innovation is being answered.
Cheap manufacturing will never again be a driving force in the American economy. That time is gone forever.
What comes next, however, is quality, precision, automated manufacturing.
This is something for which the demand will never go away, something that can never be effectively executed using cheap, low-tech facilities, and something that major American companies are pursuing with billion-dollar research and development budgets.
I'm talking about the next generation of high-tech, robotic manufacturing — an essential component to a laundry list of modern product classes, from computer chips to automobiles.
Yesterday's Muscle Is Today's Electron
Major brands including Rockwell Automation (NYSE: ROK), Tesla (NASDAQ: TSLA), and even Ford Motor Company (NYSE: F) are entering this field to improve and streamline their production lines.
And though the idea of replacing humans with robots may feel like a conflicting way to help the American worker, the job opportunities it creates come in several forms.
Robots need design and production just to get started. They require software updates and physical maintenance to stay online, and they require constant evolution to remain competitive.
The jobs these companies are creating today aren't the low-grade, no-high-school-education-neces
Bigger Is Usually Better... But Not in This Case
The companies I mentioned earlier are all highly diversified, multibillion-dollar industry giants.
Their share prices will certainly benefit from this technological "re-shoring" of American manufacturing, but as a percentage of the whole, these endeavors are only one of many interests.
There is one company out there today whose entire business model centers on the automation industry.
It's a company with a total market capitalization of right around $1 billion, making it relatively tiny in comparison to the rest of the field.
This size disadvantage, however, is an enormous profit advantage when you look at the long-term potential.
Because the more focus is placed on this industry as it emerges, the bigger the payoff in the end.
I've been studying this company for some time, and just last week, I finally published a detailed research report on the topic and the opportunity.
Alex Koyfman
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