Four Reasons Manufacturing Is Returning to the United States

car driving on a fast streetIf you’ve been following this blog, you read about the good news this week: manufacturing is growing in the U.S.

Indeed, after decades of negative growth, fewer American companies are shipping production overseas. Over the last four years, American manufacturing has grown by about 650,000 jobs.

But why exactly has there been a rebound? Here are some of the big reasons:

  1. Rising labor costs in China. China has long been the most popular destination for outsourced American jobs, but labor costs for Chinese workers are rising much faster than they are for their American counterparts. Labor and transportation costs in China are increasing about 17% a year, while wages for American workers have increased only 2.3% over the last ten years.
  2. Energy costs. The boom in the natural gas industry in this country has certainly been a help. Natural gas and electricity are essentials for manufacturing, and the United States pays at least 40% less for them than the rest of the world.
  3. Exports. Shipping American-made products to foreign markets has become a much more viable option, in large part because the cost of shipping overseas has decreased dramatically. America’s trade deficit has made cargo space on ships leaving the U.S. cheaper, so shipping is now more affordable.
  4. Convenience. Locally-produced goods are goods that businesses have more control over, and quality control is always a priority. Issues like shipping delays and problems related to differences in time zones tend to be smaller deals when the manufacturing is done locally. And now that the cost difference between American and overseas manufacturing is shrinking, convenience is becoming a more important factor. 

We’re glad to see American manufacturing doing so well here in the United States.

As we’ve said on this blog before, buying locally and supporting local businesses is a good way to help the economy of both the state and the country. It’s also a good way to make sure the American manufacturing renaissance is here to stay.

photo credit: Thomas Hawk via photopin cc