With gas from Texas, Pennsylvania or Louisiana, the United States not only has a powerful money machine, but also a very effective persuasion tool for convincing industries in the growth phase of the advantages of locating there. Its vast underground reserves and massive fracking revolution have made the North American giant the world's largest producer and exporter of this fuel, essential for heat-intensive manufacturing processes. And they're bringing dozens of big names from the secondary sector – particularly high-skill and tech-intensive sectors – to their door as they look for new locations.
The best industrial policy today is cheap energy. Because force majeure cut Germany off from Russian gas, delivered by pipe and at a cut-rate price, Germany was denied one of its industry's greatest competitive advantages. Without a cheap molecule, its secondary sector remains unprotected. With new cards on the table, American gas brings out its best features: it is protected from the whims of geopolitics and has its own abundant and, above all, very competitive resource. After falling by half last month, American gas is currently approaching historic lows and, beware, four times cheaper than Europe. The best possible advantage to attract the interest of large industrial companies to establish themselves in their territory.
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After Russia's invasion of Ukraine, the European Union – a partner in defense and security but a natural competitor to the United States in the race for top industries – was forced to replace all the gas piped to its eastern neighbors with Liquefied natural gas (LNG transported by ship). A far from simple replacement that has forced us to build new regasification terminals – eight in less than two years – and pay a premium at the source: LNG – which, paradoxically, comes in abundance from the US. €“ is by definition much more expensive than what Gazprom delivered by pipeline. A blow to the waterline of the 27 countries with the highest production, above all Germany, Italy and the countries of Eastern Europe.
Projects are ongoing
According to Bloomberg data, the U.S. industrial sector's investment in new manufacturing facilities – or in renovating existing ones – doubled between mid-2022 and mid-2023, reaching a new all-time high. A very significant part of this effort is a response to the push by a single sector, namely the semiconductor sector, into artificial intelligence. But it's not just about chips: despite higher labor costs in the United States, there are a multitude of companies – particularly in high-value-added sectors – that have invested directly in the North American giant.
Own and cheap gasoline shapes the present. But aware that the industrial future depends on renewable energy, the US government has enacted the Inflation Reduction Act (IRA), a standard that goes much further than the name suggests and incentivizes investment in wind -, solar and energy storage offers. In the face of Trump-era rhetoric based on tariffs and threats against those who dared to move their power plants to third countries, Biden has cast these technologies as by far the cheapest to generate electricity, the best way to ensure this industrial boom is – even if it has its origins in the energy sector – not a flash in the pan.
Mexico also benefited
The shockwave of cheap fossil energy extends beyond the United States. Its southern neighbor Mexico has become a priority destination for lower value-added manufacturing investments for decades, and two key concepts have recently emerged that also benefit the new global industrial dynamic – reshoring (companies producing again in their country of origin) and friendshoring ( Companies looking for an area that has good relations with their place of origin). powerful mana.
Amid a global wave of industrial relocations to friendlier countries closer to the world's main consumers, the Latin American country has the best conditions: thousands of kilometers of border and excellent communication with the largest market in the world, qualified personnel, a since the first years of the North American Free Trade Agreement (known as NAFTA, now T-MEC) perfectly oiled supply chain… and cheap gas. It is fortunate to have a direct connection to the new world energy king via half a dozen gas pipelines.
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