American factories competitive edge

China , Economic Indicators , USA , What's Happening in Our Profession Aug 31, 2013 No Comments

Factory USAEven if you doubt the bit about China, the notion that the US will comfortably beat out Europe and Japan makes sense. It has a more flexible labor market, and cheaper energy and plastics thanks to the oil fracking boom.

Yesterday’s pleasant surprise: The US economy grew much faster than we thought in the previous quarter: 2.5% on the year, thanks to robust exports.

Another pleasant surprise: That might continue. America’s great manufacturing renaissance continues to attract converts. Companies including Toyota, Honda, Siemens and Rolls Royce have all shifted production to the US in recent years. Boston Consulting Group, which advises companies on their supply chains, recently made an extended case that the United States is like the China of wealthy countries because of how cheap it is to make stuff there.

Here’s BCG’s chart. What it shows is that labor and energy costs are a lot lower in the US than in Europe and Japan, and are no higher, combined, than in China. Overall, in 2015, manufacturing in the US will cost only about 5% more than in China.

USA labor and energy cost advantage

The end result, according to the consultants, is that the US could capture $25 to $72 billion in exports from the four European countries and Japan, creating as many as 1.2 million factory jobs.

via What gives American factories their competitive edge: They’re easy to close – Quartz

Rod Sherkin

Rod is a former senior executive, responsible for Purchasing, for both Pillsbury and Ball Packaging back in the 80’s and 90’s. Since then, he has continued to work in the Purchasing field as both a consultant and founder of the website Propurchaser.com.

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