Report sees U.S. manufacturing gaining ground

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Manufacturing is projected to be cheaper in the United States than in China by 2018. That news comes as manufacturing companies say they’re getting a boost as companies begin spending cash they’ve been sitting on.

Only seven of the 25 largest exporting countries had lower manufacturing costs than the United States, according to Associated Press coverage of a Boston Consulting Group report issued Friday.

Since 2004, U.S. manufacturers have improved their competitiveness, compared with every major exporter except India, Mexico and the Netherlands.

In 2004, for example, manufacturing in China cost 14 percent less than manufacturing in the United States. By this year, the China advantage had narrowed to 5 percent. If the trends continue, Boston Consulting found, U.S. manufacturing will be less expensive than China’s by 2018.

During the past decade labor costs, adjusted to reflect productivity gains, shot up 187 percent at factories in China, compared with 27 percent in the United States. The value of China’s currency has risen more than 30 percent against the U.S. dollar during the past decade.

A separate AP report detailed strong financial results from companies such as General Electric, Honeywell and Caterpillar.

Several companies have cited strong orders, which means that other large companies are investing in expensive equipment they need to grow their businesses, economists say.

“We’re on the brink of that inflection point where the economy can really take off,” says Diane Jaffee, a portfolio manager and managing director at the Trust Company of the West. “What’s different now is that the industrial companies are saying there is real demand.”

In the years since the Great Recession, big manufacturers were too worried about some part of the global economy to hire people or buy equipment that takes years to pay off.

Now, finally, the economies of the United States and Europe are showing steady progress, and although Chinese growth appears to be slowing, it remains strong.

“U.S. gets a little bit better every day. Europe is improving. The growth markets continue to expand and will provide growth during the year, even with volatility,” General Electric CEO Jeff Immelt told investors last week.


2 comments on “Report sees U.S. manufacturing gaining ground

  1. Julie Balzano

    On-shoring is gaining momentum for sure. Check out the U.S. Small Business Administration’s International Trade Loan program (ITL).

    Small businesses which currently manufacture products abroad, but want to relocate production to the U.S. for the purposes of exporting may utilize the ITL program.

  2. Fred Earl

    How anyone believes any of this BS is beyond me. We are being lied to by the government, state run media, banksters, international corporations and the crooks on wall street. We are told that we have low inflation. How is that possible? Easy. You cook the books and take out energy and food. We are told the unemployment is the lowest in years. How so? 800,000 dropped out of the workforce and the participation is close to an all time low. Wall Street is at an all time high. How is that possible? Easy. The crooks at the Federal Reserve print a bunch of money backed by nothing and give it to the banksters. The bankters give it to wall street and drive up stock prices. The stock prices are not based on performance, but on easy money. The poor saps investments (401k’s etc.) will soon be gobbled up when the insiders decide it is profit time. Manufacturing is booming and we are on the road to a robust recovery. Really? Is it the .1% GDP numbers (you know it is in the negative if we got truthful numbers) that indicates happy days are here again? I am in the business of selling capital equipment to manufacturing companies. Sales are off 80% since August of last year. We are hearing the same from the OEM’s and other sales agents. We have yet to hit bottom yet, but unfortunately the low information believes the BS, the people on the government dole are fat and happy, the government employees get paid to be incompetent, and the politicians (there is only one party now) are stuffing their pockets with the special interest payoffs.

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