America’s long-ailing manufacturers are fired up

ON MARCHSTSP 21 Canadian Pacific Railway unveiled a $25bn bid for Kansas City Southern, a smaller American rival. The biggest-ever tie-up of freight railways would, if blessed by antitrust authorities, leave the merged firm with tracks linking Canada with Mexico, via the entire length of America’s contiguous states. It would also drive what Canadian Pacific’s boss, Keith Creel, enthusiastically dubs “an industrial renaissance”. “The prospects are compelling for growth across the industrial heartland,” Mr Creel says.Whether or not he is right about the future, the deal presents a huge bet that this renaissance is already under way in the present. For a change, investors seem to agree. Having lagged behind the & 500 index of large listed companies over the past five years, American industrial groups have outperformed the benchmark so far this year (see chart). After flowing mainly to firms that peddle mostly ethereal data, money is pouring into those that make things subject to the laws of gravity.