At first glance, the era of American manufacturing looks to have passed. However, due to many changes in the nation, across industries, and with technology, it looks like manufacturing is ready to make a comeback in the United States—and a big one at that. While there are many factors that are contributing to this upcoming “boom” in the manufacturing industry, here are a few reasons for the big shift:
A manufacturing process almost entirely without labor, 3-D printing gets closer to revolutionizing industry every day. Credit Suisse expects 3-D printing to grow by up to 30 percent each year. When the technology matures and becomes cheaper than labor, the industrial balance could flip overnight.
The developing world has nearly developed. According to Bloomberg.com, some Chinese laborers now “make almost $5 an hour.” Despite being below the American minimum wage, $5 an hour vastly outstrips the penny rates that drew manufacturers overseas initially. After all, those goods also cost oil to get to the U.S.
Decreased Wages in the US
Although the U.S. has supposedly recovered from the 2008 recession, the bottom 90 percent of American earners—the people most likely to take manufacturing jobs—have hardly benefited. Businessinsider.com reports an 8-percent decline in that stratum’s wages since 1989. Any further erosion of wage difference between East and West threatens to bring the industry hurrying home.
Having the world’s reserve currency has long kept the U.S. from enjoying currency devaluation’s industrial benefit—an increase in exports. Nations often devalue their currencies to encourage domestic manufacturing since nations with stronger currencies typically demand goods denominated in the weaker. Combining with wage changes to complete the economic trifecta, a weakened dollar has already brought many manufacturers stateside.
Changes in Perspective
When Walmart shifted U.S. manufacturing to Southeast Asia in the 1990s, the reigning economic philosophy suggested that, because of comparative advantages, outsourcing would benefit both nations involved. Since then, Americans have watched their dollars build China into a major competitor. Now many people feel the hidden cost of cheap goods may be too expensive.
Although some people consider American manufacturing a strictly historical phenomenon, developments across the world make a renaissance of U.S. manufacturing likely—maybe even inevitable. Economic, political and technological changes are removing all incentive for outsourcing, and the U.S. may already stand at a new age of industry.
Author: This article was written by Dixie Somers, a freelance writer who loves to write for business, finance, and technology. She lives in Arizona with her husband and three beautiful daughters. Dixie got advice for this article from the professionals of Advantage Manufacturing Ltd., who specialize in aluminum fabrication in Calgary.
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