American Manufacturing has been leading the country out of the recession.  Now every political leader is talking about the importance of the resurgence of American Manufacturing.  But is the global environment already creating the circumstances for a resurgence in American Manufacturing?  The answer is a resounding YES!!!!

In the Boston Consulting Group report, Why Manufacturing Will Return to the US (Aug 2011), they concluded that “around 2015 for many goods destined for North American consumers – manufacturing in some parts of the U.S. will be just as economical as manufacturing in China.”

Here are the facts:

	China	United States (US)
Wages	China’s wages rose 150% from 1999 – 2006, and 19% per year from 2006-2010	US worker’s fully loaded costs rose only 4% per year
Productivity	Manufacturing output per worker in China has improved by 10% a year over the last decade.	Maintaining that growth over the next few years, China’s productivity would reach 40% of U.S. productivity by 2015: not enough to compensate for rising wages
Shipping	Transpacific shipping rates are going up
Currency	There’s been a steady appreciation of the Chinese renminbi against the U.S. dollar
Supply Chain Threats	Costs of relying on extended supply chains:   quality control problems, the threat of supply disruptions, trades disputes, IP theft…

This is part of the balancing equation I reference in my book – The Consumer’s Workshop: The Future of American Manufacturing.  Manufacturing will undergo a balancing equation settling on the optimal location between raw materials and customers.

The Information Technology & Innovation Foundation (ITIF) has developed The Charter for Revitalizing American Manufacturing built on four T's: technology, taxes, trade and talent.

• Technology is the key determinant of progress in today's world. We have a strong lead in R&D, but our competitors are chipping away at that lead, and our investment in R&D is declining.
• Our corporate tax system needs to be overhauled to reward long term investments in manufacturing and exports.
• Talent/Workforce needs to be trained to work in modern high-tech manufacturing.

But although some manufacturing may return to the United States, some of the jobs won’t be returning due to automation.  Although 404,000 manufacturing jobs have been added since January 2010, there still are 5.5 million fewer manufacturing jobs than in July 2000 – and 12 million fewer than in 1990. The long-term trend is fewer and fewer factory jobs…but a more productive manufacturing sector within the United States.

Thanks,

Ben Moore

Agent Technologies, Inc.