Made In America
Manufacturing jobs returning from China to U.S.
This article is 13 years old. It was published on December 5, 2011.
All does not appear to be doom and gloom, if we can hang on for the next few years. Much like our own St. Louis World Champion Baseball Cardinals, it has been forecasted that the U.S. may yet pull out a manufacturing miracle -- a renaissance.
"China's overwhelming manufacturing cost advantage over the U.S. is shrinking fast. Within 5 years, a Boston Consulting Group analysis concludes, rising Chinese wages, higher U.S. productivity, a weakened dollar, and other factors will virtually close the cost gap between the U.S. and China for many goods consumed in North America."
Made in America, Why Manufacturing Will Return to the U.S., by the Boston Consulting Group, notes the increasingly flexible U.S. workforce and resilient corporate sector as additional reasons for the loss of China's manufacturing cost advantage.
Wages and benefits have increased on average 15 to 20 percent per year in China, while productivity has increased an average of 10% per year, half the increase in wages and benefits.
Boston Consulting Group predicts that production will return to the U.S. especially in the area of production of those goods that have a smaller portion of the overall costs attributable to labor costs. Additionally, they see costs of transportation, duties, supply chain risks, industrial real estate [and I add intellectual property risks] and tipping the scales toward the U.S.
Automation doesn't help China, because its primary attraction is cheap labor, which isn't as cheap as it used to be. However, they estimate that China will continue to supply its domestic market, Asia and Europe. There will be some shifts of production to Vietnam, Indonesia and Mexico. However, these other countries cannot fill the gap.
Polyannish? Only time will tell. See http://www.bcg.com/documents/file84471.pdf
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More good -- if not great news -- from Ambrose Evans Pritchard and The Telegraph newspaper of London. It seems that relatively speaking, the U.S. is doing some things right from his perspective. On the energy front, for instance, we are now the world's number one producer of natural gas -- ahead of Russia. And, apparently hydraulic fracturing -- breaking rocks with jets of water -- is multiplying exponentially the shale oil supply in North Dakota, Texas and the midwest.
Did you know that the U.S. was the single largest contibutor to the global oil supply growth last year. I sure didn't. Did you also know that we supply 72% of our own oil needs -- up from 50% ten years ago.
Ambros Evans Pritchard says that Boston Consulting expects up to 800,000 jobs to return to the U.S. by 2015 with a multiplier effect resulting in 3.2 million jobs created by the loss of China's competitive advantages. A tipping point of sorts is reportedly near in computers, electrical equipment, machinery, autos and motor parts, plastics and rubber, fabricated metals and furniture. However, he does not predict an end to the global depression or healthy U.S. recovery.
See:
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8844646/World-power-swings-back-to-America.html
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