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The Tide is Turning for U.S. Manufacturing

Image via Flickr by TimothyJ

Until recently, U.S. manufacturing suffered as companies moved their factories and facilities overseas, primarily to Asia, to take advantage of the cheap labor pool and low shipping costs. The tide is turning, however, and now the U.S. is so competitive in terms of labor costs and shipping prices that U.S. companies are coming back. Furthermore, they’re bringing non-U.S. companies with them, raising the opportunities for job openings to struggling U.S. workers faced with high unemployment rates and a sluggish economy. 

A new study conducted by Boston Consulting Group reveals that the U.S. is now one of the most affordable countries in the world to manufacture goods. Part of this is due to rising labor costs in China and other traditional countries to outsource manufacturing. The other part is driven by the lower costs of shipping from the U.S. to Europe and Asia. Since China and Japan have been exporting their goods to the Europe and U.S., there’s an overabundance of shipping containers going back to these regions, which is an open market for those needing inexpensive ways to export goods to these areas of the world. 

Businesses don’t just look at operational and shipping costs when considering opening a factory or expanding production lines. They also consider how much it would cost to close such a business if circumstances required moving or closing the facility. It is now much more costly to close operations in Germany than in the U.S. These aren’t the trends of the future, according to the study. The movement of manufacturing back to the U.S. is already underway. 

Since 2005, U.S. exports are growing at seven times the rate of the GDP. The study examined five countries who are major exporters of goods competitive with goods manufactured in the U.S. Manufacturing costs in Germany, Japan, France, Italy, and the UK will be between eight and 18 percent higher in those nations than in the U.S. by the year 2015. This puts the U.S. back in place for the go-to nation of manufacturing, bringing much-needed jobs and economic stimulation back to the States. 

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