Thoughts from our Domestic Equity Team
Computer generated prototypes. Software that, with a few tweaks, can create an enormous variety of things. Highly automated milling machines that can produce parts quickly and efficiently with the help of robots. Production lines that no longer depend on economies of scale to maximize efficiency. These are but some of the many revolutionary aspects of the new industrial world that are no longer on the drawing board but are in operation today.
New digital technologies, such as 3D printing, high speed prototyping, and robotics enable companies to both reduce labor costs and to manufacture almost anywhere. In fact, digital technologies allow companies to be so responsive to local demands and tastes that they can opt to produce their goods in close proximity to their target markets. As a result we would expect many companies to relocate their facilities back to the high-consumption developed world.
After years of depressed capital spending, companies in the U.S. and other developed nations are beginning to “rebuild and retool” by investing in new technologies as they seek to benefit from the next wave of industrialization. We believe that companies will likely direct part of their spending towards these new tools which did not even exist ten years ago. At Roosevelt Investments we are looking for opportunities both in companies developing the underlying technologies, as well as companies which we think are likely to benefit as capital spending ramps back up.
Submitted by: Nainesh Shah, CFA – Portfolio Manager
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