3 Reasons Why U.S. Manufacturing Is on the Rise

American manufacturers are showing signs of regaining their competitive edge. In August, the U.S. manufacturing sector grew at a faster rate over the previous month than at any other time during the last two years. Data from July show that the manufacturing sector expanded in July at the fastest pace in more than two years and remains one sector of the U.S. economy that is still hiring.

“The overall boost in manufacturing over the last two months has some economists hopeful that the country is headed for recovery,” according to The Week in September.

The weekly news magazine offers three key reasons for the sector’s recent improvement:

  • 3 Reasons Why U.S. Manufacturing Is on the RiseRising global demand – As the global economy heals, demand for American-made products is picking up. In fact, a new report from Boston Consulting Group (BCG) indicates that, as a share of the U.S. economy, exports are at their highest point in 50 years, and U.S. manufacturing may gain up to $115 billion more in export business from rivals by 2020.
  • Rising Chinese costs – Wages in China have jumped dramatically, making it “only marginally cheaper for U.S. businesses to manufacture goods in China.” Once you consider the extra costs in terms of labor, energy and shipping, it’s clear that manufacturing in China isn’t as cheap as it used to be.
  • Affordable U.S. labor – Many factory jobs today are part-time, non-union jobs that demand specialized technical skills. Both the relatively low cost of labor and lax U.S. labor laws make it more cost-effective for some foreign companies to manufacture products in the U.S.

BCG’s analysis suggests that the U.S. is steadily becoming one of the most appealing countries for manufacturing in the developed world.

“By 2020, higher U.S. exports, combined with production work that will likely be ‘reshored’ from China, could create 2.5 million to 5 million American factory and service jobs associated with increased manufacturing,” the BCG report states.

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