The Zacks Analyst Blog Highlights: Caterpillar, 3M Co., Apple, General Electric and Delta Air Lines

    The Zacks Analyst Blog Highlights: Caterpillar, 3M Co., Apple, General
                         Electric and Delta Air Lines

PR Newswire

CHICAGO, Feb. 5, 2013

CHICAGO, Feb. 5, 2013 /PRNewswire/ --Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Caterpillar (NYSE:CAT), 3M
Company (NYSE:MMM), Apple (Nasdaq:AAPL), General Electric Company (NYSE:GE)
and Delta Air Lines Inc. (NYSE:DAL).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

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Here are highlights from Monday's Analyst Blog:

"Re-shoring" Bring Jobs Back to U.S.

The 'offshoring' movement had a profound deleterious effect on the U.S. job
market. Entire industries such as electronics, textiles, toys and shoes
shifted to China. Consequently, traditional blue collar manufacturing jobs
dramatically shrank in number. Employment in manufacturing declined from 32%
of the workforce to about 9% at present. The question then arises if some of
these jobs will return to the U.S.

If offshoring in manufacturing took jobs to China with its superior supply
chain management, modern infrastructure and skilled labor, outsourcing in
services worked in India's favor on account of its English speaking population
and prevalence of technical education.

Although still only a trickle, 'reshoring,' of manufacturing jobs is shifting
some jobs back to the U.S. One survey by the Boston Consulting Group reported
that 37% of large American employers were contemplating transfer of
manufacturing from China to the U.S. Local U.S-based production is gaining
ground on account of varied factors such as a lower logistics and inventory
buffer, weaker dollar, lower transport costs and cheaper energy at home.

Further, with wages going up over 15% each year in China along with stagnant
pay in America, the wage differential is shrinking. In any case, the share of
labor in total manufacturing costs has fallen to as low as 20% in some
industries. In such a scenario, low wages are not vital any more for
manufacturing widgets.

While reshoring to manufacture small lots in America costs more, the benefits
are realized in the form of better response to the consumer, real-time
integration of inputs from R&D and marketing, increased goodwill and positive
publicity in America. Then, many companies are fond of segmenting the market
so that they are able to service American buyers from the U.S. and meet Asian
requirements from its hub in China. The just-in-time production model is in
vogue.

It is estimated that well over two million total jobs may be created in the
U.S. over a period of time but many of these jobs will need sophisticated
skills. Low paid Chinese workers were sought by American companies until
robots operated by trained American workers at Caterpillar's (NYSE:CAT) East
Peoria, Illinois plant were able to do the work for less. The U.S. has evolved
to become an advanced production hub in other high profile cases as well.
Foreign multinationals, such as Airbus, Honda and Toyota have set up
production facilities in America.

Reshoring is already under way with 3M Company (NYSE:MMM) shifting some
production back home. Apple (Nasdaq:AAPL) is slated to launch production of
the Mac in the U.S. In a well publicized move, General Electric Company
(NYSE:GE) will create close to a 1,000 jobs in Kentucky where it will
manufacture water heating equipment.

With regard to services, again most of the mundane jobs which could be
offshored have already been exported leaving only the cerebral output in the
U.S. The reshoring phenomenon has not taken off in services to the same
extent, except for call centers which are facing demise in India partly due to
accent barriers. Delta Air Lines Inc. (NYSE:DAL) recently transferred 2,000
call center positions from the IT Capital, Bangalore to the U.S.

In the end, companies doing business in America realize that the 'Made in USA'
tag holds immense consumer appeal, and not just among Americans.

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