logisitik

Switch to desktop Register Login


Warning: Creating default object from empty value in /home4/cpc38/public_html/components/com_k2/models/item.php on line 494

Warning: Creating default object from empty value in /home4/cpc38/public_html/components/com_k2/models/item.php on line 494

Warning: Creating default object from empty value in /home4/cpc38/public_html/components/com_k2/models/item.php on line 494

Warning: Creating default object from empty value in /home4/cpc38/public_html/components/com_k2/models/item.php on line 494

Warning: Creating default object from empty value in /home4/cpc38/public_html/components/com_k2/models/item.php on line 494

Warning: Creating default object from empty value in /home4/cpc38/public_html/components/com_k2/models/item.php on line 494

Why a resurgence in US manufacturing may be the next big bet

Rate this item
(1 Vote)

US Manufacturing CostCertain conditions,including transportation and energy costs, favor re-shoring R&D and production to the United States—especially for the chemicals and metals sectors.

Localizing production can mitigate supply-chain disruptions—totalling $2.2 billion in financial impacts for United States industrial products companies in 2011. A PwC analysis finds that manufacturing steel products in the United States instead of China can provide a net cost benefi t of 2% of revenue. Reviving domestic manufacturing has been at the core of lifting the United States economy through—and in the wake of—the Great Recession.

Indeed, industrial output has experienced a slow uphill march since 2009; however, it still hovers below prerecession levels, while manufacturing employment has risen to a lesser extent (see Figure 1). Is this rebound simply a traditional cyclical recovery, or is the United States manufacturing sector poised to enter a second golden age? And, if so, what will drive such a renaissance?

Consensus views on such a resurgence have been, to a large degree, shaped by the thinking that rising labor costs in markets such as China are driving manufacturers back to the United States. Rising wages in emerging markets are certainly part
of the story, but will likely play a less prominent role than other factors in manufacturers’ decisions to re-shore or on-shore to the United States.

Back in the USA: the factors driving companies back home

PwC examined some of the key factors that could drive a manufacturing resurgence, including labor, transportation, energy, and materials costs, as well as demand, talent, availability of capital, taxes, and currency. The United States manufacturing sector is experiencing a cyclical recovery. However, structural—and likely sustained—changes in some of these areas could extend the recovery beyond what might be expected in a typicaleconomic upturn. Even if an increase in the relative competitiveness of United States labor costs were to unfold, that seems unlikely to be suffi cient to result, in itself, in a domestic manufacturing resurgence.

Instead, a host of other factors—particularly transportation and energy costs, and currency fl uctuations—are more likely the most salient reason United States manufacturers will choose to produce closer to their major customer bases. And, for manufacturers with principal customer bases located in the United States, this means re-shoring production back to the United States market. The range of factors helping the United States become a more attractive—or unattractive—manufacturing location is summarized in Figure 2.

This report explores these factors. Such a shift back to the United States. would likely lead to improved employment demand in the United States by manufacturers in both the production and R&D spheres...Download full report below.

Last modified on Friday, 14 September 2012 09:20

Email This email address is being protected from spambots. You need JavaScript enabled to view it.

1 comment

  • Amazing to see that outsourcing in China is no more the solution !

    Pierre Wednesday, 26 September 2012 09:04 Comment Link
Login to post comments

© 2009-2012 Logisitik - All Rights Reserved

Top Desktop version