Is Made in America returning to our manufacturing labels? After a generation of “Made in China” featured on most products and items made in the U.S. gaining a novelty status, it seems we are shifting the tide once again. A long running report from Boston Consulting Group indicates that the differences between China’s and the U.S.’s manufacturing costs are nearing negligible. In 2004, a product made for a dollar in the United States could be manufactured in China for only 86.5 cents. One decade later, the $1 product in the United States would cost 95.6 cents to make in China, a significant shift in the amount of savings. When transportation costs are added for product shipment, manufacturing operation is hardly worth the move to China. The report indicates the shrinking gap in costs has more to do with what is happening in China than the USA. But one factor in the US that has boosted production is the American natural gas boom, which has decreased the cost of electricity. This lower electrical cost attracts energy-intensive manufacturing industries.
The best argument to prove that this manufacturing gap is tightening and no fluke is the fact that many Chinese companies are establishing factories in the United States, primarily in the Southern States. South Carolina boasts two new companies: the Keer Group, a Chinese yarn-maker investing $218 million in a factory and JN Fibers, another manufacturer recycling polyester is investing $45 million in production operations in the state. While some have concerns about the type of work these companies offer, it appears the jobs are for highly trained manufacturers. Low skilled and arduous labor work, such as sewing garments, appears to be staying in less developed countries.
If China is no longer the most favorable manufacturing location, where is? The cheapest country is now Indonesia, followed by India, followed by Mexico, Thailand and then, finally, China. Surprisingly, the U.S. came in at number 7, which is a favorable sign for the future of production in the United States. Made in America is heartwarmingly nostalgic.
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