U.S. Companies Keeping Business At Home

U.S. companies, facing slowing markets and rising costs around the world, are taking a new look at their home market.

With growth slowing in China and a slump gripping much of Europe, companies are adding capacity in the U.S., replacing aging equipment and even moving overseas production back from low-cost labor markets, a sign that corporate America could be poised to take a bigger role in the economic recovery.

Union Pacific expects to buy twice as many locomotives this year, spending upward of $400 million.

The pace of earnings growth at companies slowed in the fourth quarter, and there are signs that profitability is falling. That is prompting companies ranging from beverage maker Coca-Cola Co. to industrial supplier Emerson Electric Co. to disclose cost cuts. But after keeping a tight lid on costs for the past few years, many other companies are expanding capacity to meet rising demand.

United Rentals Inc., the world's largest equipment rental company, plans to increase its capital spending by about a third, to $1 billion, this year as more construction and industrial companies opt to rent rather than own equipment like elevated forklifts and backhoe loaders. Cummins Inc., which makes engines for trucks and heavy equipment, is boosting its capital spending to more than double the rate of two years ago.

"It is an environment that feels like it is building momentum," William Plummer, United Rentals' chief financial officer, said in an interview. "We are coming out of the depths of the recession and are starting to build momentum on the upside."

U.S. businesses increased their investments in December. According to the Commerce Department, new orders for nondefense capital goods excluding aircraft, a proxy for how much companies spend on equipment, climbed 2.9% from November. That ended two months of declines, suggesting businesses are becoming more confident. Compared with a year earlier, companies shipped 9% more.

There are signs that hiring may be picking up as companies expand facilities. Job growth in January was its highest level since April, with unemployment falling for the fifth consecutive month.

Source:  WSJ.com

Alliance for American Manufacturing calls for access to capital and trade deficit reduction.

Industry Group Urges President Obama to Adopt Manufacturing Strategy in 'State of the Union' Agenda

As President Obama prepares to report to the nation on the State of the Union, the Alliance for American Manufacturing has sent a letter urging him to renew his focus on the challenges and opportunities facing American manufacturers and their workers. 

"American manufacturing is in crisis mode," said AAM Executive Director Scott Paul. "In his State of the Union address, we're asking the President to announce a comprehensive national manufacturing strategy that can revitalize our industrial base and ensure a wider economic recovery."

AAM's letter to the President outlines five key areas of a national manufacturing strategy that should be delineated in the State of the Union:

*Access to capital
*Creating demand and promoting manufacturing utilization
*Workforce development
*Competitiveness
*Trade deficit reduction

Read complete article at-

http://industryweek.com/articles/industry_group_urges_president_obama_to_adopt_manufacturing_strategy_in_state_of_the_union_agenda_23663.aspx

Major Incentives for Equipment Purchases in Year-End Tax Bill

Companies have something to cheer about when it comes to their upcoming large equipment purchases.  The new tax-law that went into effect this week includes 100% expensing for qualified capital investments, including investments in plants and equipment, for 2011 and a 50% deduction for 2012. This is great news as companies remain uncertain when it comes to the economic growth for business.
 
Mazuma Capital supports the ELFA in their crusades for the use of capital formation tax incentives.  The focus remains on the need to invest in plants and equipment as a key component of economic growth and competitiveness. The provision allowing the full deduction – without monetary limitations – of qualified capital investments through 2011 and the 50% bonus depreciation level for 2012 is a major win for economic growth.
 
We hope to see growth in manufacturing and in many industries whom have felt the pinch of the current economy.  Agriculture, construction, manufacturing and transportation outlooks seem positive as growth is reported.  We will all be routing for the best as we continue full steam ahead into 2011.