The USA now sells more “made in America” products to the rest of the world than ever before!
Why? Because of automation and increasing levels of productivity. In addition, since 2002, Chinese labor costs have increased dramatically. With USA automation factored in, the cost ratio has gone from a high of 22:1 to 10:1 and now 5:1. In addition, China’s labor costs have grown up to 20% annually vs. a 2% increase in the USA.
This new manufacturing competitiveness is due not only to straight labor costs, but also to the fact that USA productivity levels are extremely high. This is not only because of the American work ethic, but also thanks to implementing various automated material handling and manufacturing products and solutions. The axiom, “working smarter and not harder,” seems to be the rule in which the USA is capturing the manufacturing market.
Analysts at Boston Consulting Group (BCG) predicted in 2011 that the US will match the effective manufacturing costs of the Eastern regions of China by 2015 and that China will be moving manufacturing to the central part of the country for lower wages. However, the lack of infrastructure in China’s interior, including transportation, education and utilities will severely hinder the success of such a move.
In fact, BCG predicts that by 2015 the USA will be the low cost provider at 8 to 18% less than Germany, Japan, France, Italy and the UK. This should lead the manufacturing renaissance to even higher levels in the USA.
Knowing the future and how the economy is trending, it’s important that your organization contacts Integrated Systems Design (ISD) to re-asses your operation’s production lines, assembly, kitting, order picking, sortation and shipping systems, processes and procedures to ensure they’re keeping you ahead of your competition (in the USA and abroad).