The Movement of Manufacturing Jobs
Over 5 million manufacturing jobs have left the United States over the last ten years, with the majority of them to the Far East. The reasons seem obvious:
Lower labor costs and Fewer regulations
Most predict that the trend will continue unabated, BUT
I PREDICT that the trend will reverse!
In fact it already has begun.
Am I nuts? That may be a topic for a broader discussion, but in this narrow context, hear me out.
1) The differential in the labor costs has narrowed dramatically. According to the Bureau of Labor Statistics, in 2002, the difference in average hourly labor costs was over 48%. By 2009, that margin had diminished to under 21%.
2) For better or worse, domestic regulations have lessened significantly in that timeframe, while the global international atmosphere has led to a dramatic increase of controls in most foreign markets.
3) US manufacturers have come to realize that they failed to consider certain less tangible factors; factors that nonetheless impact the bottom line. These include:
- Timeliness and delays in getting products back to the US, and thus to the marketplace.
- Reduced control of the complete process, resulting in inferior products, products that do not match the intended specifications, and overwhelming, sometimes devastating recalls.
- The marketing value of the Made in U.S. label, especially when compared to the negative P/R of a foreign label on products like American flags, clothing products for the NFL, NBA, and MLB, etc.
There are other factors, as well. But at the end of the day, the fact is that a net of almost a half-million of these jobs has returned during the last two years. That may be no more than a dent in the 5 million that left, but the tide has shifted and the numbers will increase in favor of domestic production over the next decade.
Mark my words. You heard it here first.