American Manufacturing on the Rise

There’s good news for anyone and everyone that wants the U.S. to regain its status as a powerhouse of manufacturing. A new report from the Boston Consulting Group (BCG) shows that the United States is ranked second, just after China, in terms of cost competitiveness in worldwide manufacturing, which means that it’s more cost effective to manufacture goods here than other parts of the world.

The United States is one of BCG’s “rising stars” in global manufacturing thanks to the significant improvements in comparison to all other leading exporters around the world. It’s things like a stable wage growth, steady exchange rates, sustained productivity gains, and large energy-cost advantages that have helped. So far, a minimum of 300 companies have returned their manufacturing from overseas back to the United States.

What’s also interesting about this new report is that it shows how the cost competitiveness of manufacturing has shifted dramatically over the past decade–so much so that the perceptions most people have of high-cost nations and low-cost nations are no longer relevant. Now, Brazil is one of the most expensive countries to manufacture in, while the United Kingdom is one of the cheapest places in western Europe. Mexico is also cheaper to manufacture in than China, as well.

According to Hal Sirkin, a senior partner at BCG and the report’s co-author, “The gap is closing and, when you add the transportation costs, it makes a lot more sense for a lot of products to be made in the U.S. than in China.”

Cost competitiveness is increasingly more important as world leaders are recognizing how economically important a stable manufacturing base has become.

All this being said, it’s important to note that America’s resurgence is partly because Chinese manufactured goods are becoming more expensive, while U.S. manufactured goods are becoming cheaper–for better or for worse.

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