Coming home

Date posted: December 28, 2012

There’s renewed optimism about manufacturing in the country. Manufacturing has been adding jobs recently in both the nation and here in North Carolina. Some of these jobs are coming from companies moving operations back to the U.S. from overseas. Why does it appear manufacturing is enjoying a revival? N.C. State University economist Mike Walden answers.

“A couple of factors here. … First of all, manufacturing always takes a big hit during recessions simply because people and businesses can postpone buying manufactured products. Then when the economy begins to improve, you see a strong rebound in manufacturing. Probably the best example of that right now is the auto industry.

“But also you mentioned some companies moving operations back to the U.S. We had, for example, General Electric as well as Apple talk about moving some operations back to the U.S. Several factors (are) at work here. First of all, higher fuel prices are making it more expensive to ship products for example overseas from Asia to the U.S. At the same time, lower natural gas prices here in the U.S. (are) helping to lower U.S. production costs here. Another factor is wages of foreign workers. The average Chinese worker now has seen his or her wage grow five times since 2000. That’s obviously reducing their competitive edge. At the same time U.S. workers have becoming more productive in terms of their costs per unit hour of production.

“And the result of all this is that for some companies, certainly not all, but for some companies it’s now making simple economic sense to produce back here in the U.S.”

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