Evidence of a Comeback

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A 16-quart wheeled plastic cooler could be evidence of an accelerating global trend that’s providing an important boost to the US economy. Coleman Company, which manufactures coolers, is contributing to what’s being called the “re-shoring” or “on-shoring” of American manufacturing. It’s also a reversal of the 30-year outflow of manufacturing from the US to China.

So, what’s the reason?

The ongoing increases in wages in China have significantly eroded their competitive advantage. When other expenses such as duties, electricity, industrial real estate and shipping costs are factored in, the once sizeable savings have diminished.

On-shoring is part of a larger trend of an American manufacturing resurgence. This is discussed in more detail in a recent article in WorthWhile called “On-shoring is evidence of an American Manufacturing Comeback.”  In this article, we learn that the Coleman Company is not alone in their decision to return production to the US. Here are some interesting points gathered from this article:

  • Major companies that have brought back manufacturing and jobs back to the US include Motorola Mobility (2,000 jobs in Texas), Ford (1,200 jobs in Michigan), General Electric (400 jobs in Kentucky) and Caterpillar (3,000 jobs in Georgia).
  • The government doesn’t keep track of jobs that have left and come back, so there’s not much hard data on on-shoring. However, there is some research to support anecdotal evidence, such as Coleman coolers.
  • The manufacturing revival is also being driven by the resurgence of the domestic energy industry, which is utilizing new technologies to produce record amounts of oil and low-cost natural gas.
  • A recent report from consulting firm HIS estimated that the unconventional oil and gas boom was responsible for the creation of 2.1 million jobs domestically in 2012 and will support 3.9 million jobs by 2025.

In summary, this is big news for the larger economy. While labor-intensive manufacturing (e.g., shoes and apparel) is unlikely to have a full comeback in the US, the future for capital-intensive manufacturing is looking much brighter.  The return of manufacturing to the US and the overall gain of US competitiveness is very encouraging.

 

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