Manufacturing trends in the United States look very promising. In the last few months, the manufacturing sector in the country has seen a higher growth than what the sector experienced in the last couple of years. This truly is an optimistic sign, as it is an indication the U.S. manufacturing is once again on the rise. There is hope the country’s economic recovery is around the corner. But what are the reasons for the sudden rise?
With manufacturing units and factories reporting demand is higher than the production, there appears to be three main reasons for it.
1. China is no longer as cheap as it used to be
Once upon a time, the lure of China was great because of cheap labor. However, in the last few years wages have climbed so steeply that many Chinese businesses are resorting to hiring illegal workers from Vietnam and Myanmar. While this has made manufacturing goods slightly cheaper, the cost actually climbs up substantially when you factor in the energy costs.
In fact, the cost of manufacturing in the United States is just 5 percent higher than manufacturing and shipping the goods from China. This explains why many companies are gradually shifting their production units back to the United States.
2. Trends show an increase in global demand
The global recession took a toll on American manufacturing and production sector, as the demand for American-made products had dipped. However, as the world economies are beginning to recover slowly but surely, there is once again a demand for different types of American products.
Along with the other developed nations, the United States too is seeing an increase in demand for its products and it looks as though the after effects of the recent financial crisis may be wearing off.
3. Foreign companies are getting attracted to the comparatively affordable labor in the U.S.
Manufacturing and production jobs in the United States are no longer like what they used to be a few decades ago. Today, the jobs are non-unionized and require technical skills to operate complex machines and tools. Furthermore, most manufacturing companies in the U.S. are offering part-time jobs to reduce their operational costs. Hence, labor has become more affordable for production companies located in Japan and the European Union. This is pushing many foreign companies, such as Airbus and Ikea, to open up factories in the U.S.
It also is important to note the legal hassles to shut down factories are less in the United States compared to the European Union, where it can be quite expensive to fire or lay off workers.
For many manufacturing companies, the United States offers a huge market. Hence, shifting their factories to the country allows them to be located close to their distribution network. This, in turn, lets these companies supply their customers quickly and efficiently.
With so many reasons, there is no question that the manufacturing sector is set for windfall and will flourish in the United States in the coming years.