U.S. Manufacturers Look Homeward, Boosting Domestic Production

United Rentals, one of the world's largest equipment rental companies, plans to increase its capital spending by about a third, to $1 billion, this yea. More construction and industrial companies opt to rent rather than own equipment like elevated forklifts and backhoe loaders.

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.

The pace of earnings growth at companies slowed in the fourth quarter, and there are signs that profitability is falling. That is prompting companies 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. American companies bring staff and equipment back to the U.S. in the face of economic uncertainty in Asia and Europe.

“It is an environment that feels like it is building momentum,” said William Plummer, United Rentals' chief financial officer. "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, an indicator for how much companies spend on equipment, climbed 2.9 percent from November.

That ended two months of declines, suggesting businesses are becoming more confident. Compared with a year earlier, companies shipped 9 percent more.

– Courtesy of Wall Street Journal