The United States has one of the lowest manufacturing costs in developed countries

by:Gewinn     2022-04-26
A few days ago, a study by the Boston Consulting Group found that manufacturing exports have become the 'unsung heroes' of the US economy. While public attention has been focused on the U.S. trade deficit, few have noticed that since 2005, U.S. exports have grown faster than GDP seven times, and the share of exports in the U.S. economy has reached a 50-year record. This is just the beginning. With the improvement of manufacturing competitiveness, the annual export value of the United States will increase by 70 billion to 115 billion US dollars by 2020. Two-thirds of the new exports came from the transfer of production from Europe and Japan back to the United States. By 2020, the U.S. will create between 2.5 million and 5 million manufacturing-related factory and service jobs as exports increase and production capacity may flow back from China. The basis for the above assumptions comes from changes in the cost structure in favor of U.S. manufacturing, which is starting to become more cost-competitive compared to the advanced economies of major exporters. The United States has become one of the countries with the lowest manufacturing costs in developed countries. It is estimated that in 2015, the average manufacturing cost of the five developed export economies - Germany, Japan, France, Italy and the United Kingdom will be 8% to 18% higher than that of the United States. The biggest drivers of cost advantage come from labor costs, gas and electricity. In addition, shipping costs on major U.S. trade routes also have significant advantages compared to other major manufacturing economies. In 2020, the United States is expected to win 5% of total exports from these developed countries. This change in costs will have important implications for world trade. China and other major developed economies account for 75% of total global exports, and U.S. exports in many industries will increase significantly. The biggest impact should be on industrial products that account for a large proportion of global trade, such as transportation equipment, chemicals, machinery, computers and electronic products. Production gains from U.S. factories will come in many forms, with more companies turning to the U.S. as a low-cost export base to the rest of the world. As U.S. and foreign companies reopen their factories in the U.S., U.S. production will replace what was previously produced overseas and imported. In terms of new capacity, the full impact of the change in cost advantage will be felt within a few years, and the ability to create new jobs is entirely dependent on how the United States continues to improve its global competitiveness. One of the highest challenges facing U.S. manufacturers is the lack of skilled workers, but research shows that in the short term, the problem of U.S. manufacturing technology gaps will not hinder the recovery of U.S. manufacturing. If new skilled workers are not trained immediately, this shortage will become long-term risk. Companies should continue to diversify their manufacturing operations globally, but at the same time they should note that changes in the structure of production costs will be a potential paradigm shift in global manufacturing.
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