Three Benefits of the Return of U.S. ManufacturingFebruary 25, 2015
What does the resurgence of US manufacturing really mean?
The resurgence of US manufacturing is taking hold around the country. In the past, U.S. companies could rest assured that as long as they were innovative, it did not matter where products were created, but this has changed in recent years. It is evident that a successful U.S. manufacturer is more than just a leader in innovation; they are also a proponent of American made products.
Benefits of returning manufacturing to the US
- Higher wage jobs- Manufacturing matters to the U.S. because it provides higher wage jobs in comparison to other industries. As estimated by the Bureau of Labor Statistics, employers in manufacturing, mining and construction pay an average of 15% more an hour than retail, restaurants, or other service industries.
- Positive effect on the economy- The growth of U.S. manufacturing impacts the economy more significantly than any other industry. The National Association of Manufacturers estimates that for every dollar spent in manufacturing, another $1.37 is added to the economy, a “multiplier effect,” if you will, meaning that an increase in demand for American made products will increase national income overall.
- Increased exports- A strong US manufacturing base also allows companies to increase exports. Since 1976, the U.S. has suffered persistent trade deficits, meaning that, unfortunately, we’ve been consistently borrowing from other countries. By returning operations to the U.S., manufacturers can ensure that this is minimized.
While the news about US manufacturing continues to be positive, there are a few things to watch out for:
Increased product price- The US dollar has experienced a recent increase compared to other major currencies. This makes U.S. manufactured goods more expensive when offered for sale in foreign markets, hence the increase in 2014 U.S. imports as compared to exports.
Weak European economy- Continued weakness in the European economy will also reduce U.S. manufacturers’ ability to export their goods. Over the last 12 months, the euro zone economy has essentially been flat which will be a hurdle for the U.S.
A positive trend overall
Nonetheless, the trend toward the reshoring of U.S. manufacturing should continue, especially considering the recent reduction in energy costs. A thriving U.S. economy almost certainly depends on the return of U.S. manufacturing.
To learn more about reshoring please join me and our team at World Trade Day, presented on May 20, 2015 by the John H. Chafee Center for International Business at Bryant University. I am proud to be serving as co-chair for this year’s World Trade Day, which is one of the largest international trade conferences in the nation. This is a wonderful opportunity to learn best practices from industry professionals and network with other companies looking to grow internationally. For more information about World Trade Day “Changing Dynamics: Creating Opportunities for New England", please do not hesitate to contact me.