more-arw search

Manufacturing Returning to US, Report Shows

A convergence of market conditions has led to a resurgence in U.S. manufacturi

U.S. manufacturing took a serious hit when the economy started its downward spiral in 2008. Even before then, many businesses had been outsourcing jobs to other countries as a way to cut costs in an increasingly competitive market. Now, however, it appears that conditions are ripe for manufacturing jobs to return to America's shores.

Audit, accounting and consultancy firm PricewaterhouseCoopers recently released a report that showed rising labor costs in places like China and India have made outsourcing less cost-effective for many U.S. manufacturing firms. For example, labor costs in China rose 80 percent between 2008 and 2011, and are expected to continue climbing over the coming years. During that same period, U.S. labor costs rose only 10 percent.

Labor costs aren't the only issues contributing to U.S. manufacturing's resurgence. Rising fuel prices have sent transportation costs skyrocketing, a weakened dollar has made U.S. exports more attractive to foreign markets and domestic market demands for U.S.-made products have converged to drive growth in this sector, the PwC report found.

"Depending on the industry, there may be considerable benefits to establishing regionalized supply chains and R&D facilities in the U.S., such as reducing costs, shortening lead times, protecting intellectual property and mitigating many of the risk factors inherent in developing markets," added Bob McCutcheon, PwC's U.S. Industrial Products leader.

Products and Companies: