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Manufacturing Jobs Move Back Home: Are You Part of the Trend?

Posted 7:26 PM by

More and more jobs are moving back to the U.S. as the margin of cost benefit of outsourcing those jobs continues to minimize. A CNN article summarizing the results from a survey published this week by the Boston Consulting Group showed the number of firms that have moved production back to the U.S. or plan to do so in the next two years has doubled over the past 18 months. Most large, U.S. companies have already moved some manufacturing back to America or are actively considering it. Companies such as General Electric Co., Whirlpool Corp., Caterpillar Inc., and Apple have helped this trend gain momentum.

The key factors attributable to the shift from “Made in China” to “Made in America” are as follows:

• Declining labor costs in America
• Rising labor rates in China
• Lower energy costs: natural gas and electricity
• Proximity to customers
• Availability of skilled laborers
• Shipping costs

According to a recent article by CNN, companies choosing to move production back home are expected to create 2.5 million to five million factory and service jobs in the U.S. over the next seven years. Manufacturing jobs account for only 8.8% of the total American jobs compared to 22% “back in the day” when manufacturing was at its peak. 

While large companies are bringing jobs back to America, wages have dropped in the past few years. Factory workers being able to find a job is obviously good news; however, they will not have the same spending power that they once did. The Boston Consulting Group reports that by 2015, the average labor costs in the U.S. will be approximately 16% lower than in the U.K., 18% lower than in Japan, 34% lower than in Germany, and 35% lower than in France and Italy. Those projections seem hard to believe when you consider the history of manufacturing in the U.S.

Regardless of wages, I believe most Americans would agree that the trend towards “Made in America” is good news for the U.S. manufacturing sector.

About the Author
Sarah Hammond is a manager in Katz, Sapper & Miller’s Business Advisory Group. Sarah provides financial, tax and consulting services to a variety of industries. She has experience in tax planning, forecasts and projections, and financial analysis. Connect with her on LinkedIn.

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