Power Breakfast: Factory rebound, clunkers, mortgage giants

This recession is having an interesting effect on manufacturing.

The sick part of this economy for decades, factory production is being looked to in this quarter for help in spurring a recovery. That’s partly because many companies have to replenish their inventories after letting them become depleted in cost-cutting moves.

Now, in another sign of life, AGCO says it’s considering building a plant in the U.S. in the next few years that could employ 2,000. Georgia is being considered as a possible location, writes AJC reporter Peralte Paul.

After years of global growth through acquisitions, the Duluth-based maker of farm equipment wants to boost its market share in the United States, chairman and chief executive Martin Richenhagen said.

“We’re not as big in the U.S. as we want to be,” Richenhagen told Paul. “We want to be double in five years from our current market share of 10 percent.”

That strategy, he said, likely means the construction of a tractor factory.

Long-term, some economists believe U.S. manufacturing will become more competitive if oil prices rise considerably, as they are expected to do over the next few years. That means shipping costs for relatively heavy items will increase. That reduces the comparative advantage for some companies thinking about moving production abroad.

We’re not likely to see a manufacturing renaissance here. But we may see a sector that becomes stronger than once thought. It’s worth keeping an eye on.

Also in the AJC:

• Power companies have huge stake in tri-state water war
• Senate to vote on $2 billion ‘cash for clunker’ bill
• Some dealers put brakes on clunker program until vote
• Low-income Atlantans go green

In other media:

• Obama administration considers remaking mortgage giants
• Petitions for U.S. worker green cards down sharply
• Judge doesn’t sign off on BofA, SEC settlement
• White House affirms deal on drug costs
• Fed reviews two programs as markets look more stable