Total output from American manufacturing relative to gross domestic product is back to pre-recession levels, with more than half a million new jobs. Global manufacturing executives predict that by 2020, the U.S. will be the most competitive manufacturing economy in the world. Cheap labor is no longer the most important input for manufacturers. Success in the manufacturing sector can be attributed to the availability of advanced technologies/materials and strong protection of intellectual properties. The U.S. beats out China on both of these.
In the manufacturing sector, the U.S. is among the most productive economies in the world in terms of dollar output per worker. A worker in the U.S. is associated with 10 to 12 times the output of a Chinese worker. The wage gap between Chinese and U.S. workers is shrinking at a much faster rate. In addition, customers have come to expect shorter delivery windows. Consumers are accustomed to delivery within one or two days, if not the same day. It’s easier for companies to meet these demands when they are manufacturing their products right here.
An example of a company shifting their manufacturing to the United States is Kent International Inc., a bicycle company. They invested $4.3 million in a new assembly facility in South Carolina. By the end of this year, they will produce 500,000 bicycles. This new factory will bring up to 175 jobs to the area. The bikes are sold at Walmart, who recently announced their intention to help boost job creation and manufacturing in the United States through buying an additional $250 billion in products that Support American jobs over 10 years. Walmart says overseas labor costs are rising, while energy costs in the U.S. remain low. A short supply chain, no matter where you are, can help with getting products on the shelves faster, managing inventory, and responding to seasonal and trend demands. In June 2016, they are hosting their fourth U.S. Manufacturing Summit at their global headquarters in Bentonville, Arkansas. It will include a daylong event for companies to pitch U.S. made products to Walmart buyers.
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