According to a recent article in the Washington Post, companies that once moved their manufacturing facilities overseas are now starting to consider moving them back to the U.S. The article points out that American companies, such as Caterpillar, GE, and Ford, are shifting some of their manufacturing back to the U.S., and cites a 2012 survey that found 37% of U.S. manufacturers with sales above $1 billion are considering shifting some production from China to the U.S.
The increasing productivity of American workers, rising shipping costs, cheaper domestic energy, stricter Chinese labor laws, and more frequent Chinese labor disputes are all factors in those considerations, but the primary reason is the shrinking gap in the cost of labor between China and the U.S. According to the article, the difference in labor costs between the two countries was $17 per hour in 2006, but could shrink to as low as $7 per hour by 2015.
The article cautions, however, the likelihood that American manufacturing would return to even 1990’s type levels. With many plants setting up in the nonunion South, organized labor has largely been shut out of new manufacturing opportunities and manufacturing jobs no longer have higher average hourly earnings than the typical private-sector job. In addition, technology continues to displace manufacturing workers, regardless of their location.
