The Boston Consulting Group (BCG) released a new report based on the group’s research last September. The new report, entitled “Behind the American Export Surge: the U.S. as One of the Developed World’s Lowest Cost Manufacturers,” predicts the U.S. has already started to see gains in manufacturing over competitive nations in Europe and Japan, and that this trend will continue. The gains for the U.S. aren’t just due to lower labor costs, according to the report, but are further driven by lowering energy costs.
The gains are expected in seven sectors: chemicals, machinery, transportation equipment, petroleum and coal, computers and electronics, electrical appliances, and primary metals. These seven sectors are expected to account for three-quarters of total global exports heading into the near future. Jobs from these export increases should occur in factories as well as in support industries for these manufacturing processes, such as construction of facilities, transportation, and retail.
The increase in exports combined with companies bringing facilities back to the U.S. from abroad, could add 2.5 to 5 million manufacturing and related service jobs to the U.S. economy by the end of 2020. The report predicts the trend will lower unemployment rates in the U.S. by two to three percentage points from its current 7.4 percent.
Labor costs are currently about 17 percent lower than competitive countries in Europe and Japan, but by the year 2015, labor costs in the U.S. could be as much as 35 percent lower here. In addition to cheap labor, the U.S. could have natural gas prices that are as much as 60 to 70 percent lower than competitive nations and electricity costs that are 40 to 70 percent lower.
The trend for the past four decades has been toward moving jobs out of the U.S. to cheaper markets, but the trend is reversing. According to the BCG report, this trend has just started and should become stronger quickly. Companies such as Toyota, Airbus, Rolls Royce, Siemens, and Yamaha have already brought new manufacturing facilities to the U.S.