The US Manufacturing and Electrification Megatrends Are Here and They’re Way More Than AI | Chris Semenuk

**Chris Semenuk** (0:00)
US manufacturing has essentially been in a recession for three straight years, and we have only just emerged now. The ISM PMI survey just reached above 50 in the last three months. And that's after three consecutive years of sub-50. It's the longest construction period in the survey, three straight years. And we are only three to four months into a recovery. While everyone is trying to chase hyperscalers, semiconductor companies, space companies, there is an enormous investment opportunity happening right now underneath everyone's nose that involves just basic US industrial champions that are businesses that have essentially been off the radar for, in some cases, five to ten years.

**Max Wiethe** (0:46)
Hello and welcome to Other People's Money. I'm Max Wiethe and I'm joined today by Chris Semenuk. He's an investment partner at Tema ETFs where he manages two funds, one focused on manufacturing and reshoring, R-S-H-O, and the other focused on electrification, V-O-L-T Volt. Both have performed very well compared to the market since their inception and year to date. Chris, thank you for joining me today.

**Chris Semenuk** (1:12)
Hi Max, thanks for having me on.

**Max Wiethe** (1:13)
Manufacturing, reshoring, electrification. I might argue that they're tied to a broader trend of reindustrialization. We could argue about whether we're reindustrializing or this is a new wave of industrialization that's very different than the industrialization that this country had before. I'm sure we're going to get into those nitty gritty details, but I want to just start out with a question more broadly about, this is something that we've been hearing about from multiple administrations. It broadly has bipartisan support that we should be reindustrializing here in the United States and whether it was the CHIPS Act with Biden or tariff policy from President Trump.
It's clearly being pushed at the highest levels of government. My question is, to what extent is it a reality?

**Chris Semenuk** (1:59)
I get that question all the time. I think reindustrialization or de-globalization in terms of a world scale are both extremely real. Where do you see that most?
Just look at the unprecedented size of backlogs within household multi-industrial businesses, whether that's GE, GE-Vernova, companies like Caterpillar. We're looking at backlogs here that have historically never been recorded. You know, backlog at Caterpillar is north of $60 billion. The backlog at Vernova is north of almost $90 billion.
So the notion that this is some kind of fantasy, that we don't really see this on the ground, is frankly nonsense. And the backlogs of these businesses, whether they're large caps like the ones I mentioned or even smaller caps or medium caps, we have seen unprecedented order backlogs for businesses that extend out to two to three years in length. And the other place that an investor or an audience member can look at is simply industrial production.
Actually, yesterday or the day before yesterday, we got the April industrial production number, and that was, I think, 1.7%, which a lot of people, I think, have kind of said, wow, that's not a big number. Frankly speaking, that's a huge number because we have seen almost three to four decades of stagnation in industrial production here in the US. So what's important, I think, from an investor standpoint of view is not to look at the absolute figure, but look at the rate of change of that number. So, you know, it's real. It's look at the backlogs. We are building production capacity here in the US. We are at unprecedented highs in terms of non-residential construction. The numbers are real. They're out there. They're in the order backlogs. They're in the order backlogs of multi-industrial companies here in the US that people are familiar with. These businesses have revenue. They have earnings. They have cash flow. These are not loss-making companies. So, yeah, sorry. That's a long-winded answer to your question. But I think this idea that it's, look, in terms of re-industrialization, I think it was much more in the headlines two years ago. I think it has left the headlines and we can talk about those reasons why. But I think underneath the radar, the investment opportunity with regard to re-industrializing the US is still in its very early stages.

**Max Wiethe** (5:05)
People have an idea of it in their head. All the jobs that went overseas are going to come back and we're going to be making the same things. Manufacturing is going to look the exact same. That's not how it's going to work out. That's not how it's working out right now.
My question would be, what is the re-industrialization image that people have in their head and how does the reality differ this time around?

**Chris Semenuk** (5:28)