Return of American Manufacturing and Made in USA Brands

US EconomyWith China pay raises sending Western retailers and trading companies to new parts of the world for manufacturing solutions, some retailers and consumers are wondering: Why not bring U.S. based manufacturing back and fill store shelves with “Made in USA” brands? This suggestion is more of a reality than some may think. A recent study by the Boston Consulting Group (BCG) forecasts a renaissance in U.S. manufacturing within five years. Since the 1980s, U.S. interest in outsourcing has grown, preferring Chinese manufacturers for their ability to produce in bulk quantities, at high quality and low prices. However, as BCG explains, “With Chinese wages rising at about 17 percent per year and the value of the yuan continuing to increase, the gap between U.S. and Chinese wages is narrowing rapidly. Meanwhile, flexible work rules and a host of government incentives are making many states increasingly competitive as low cost bases for supplying the U.S. market.”

Measuring the PROs and CONs of American Manufacturing

Even with an estimated 7 million manufacturing jobs moved offshore since the late 1970s, Mark Perry, professor of economics at the University of Michigan, tells USA Today, “U.S. manufacturing, taken by itself, would currently rank as the sixth-largest economy in the world, just behind France and ahead of the United Kingdom, Italy and Brazil.” While increased American manufacturing may resolve the questionable future of Chinese manufacturing and will continue to enhance our economy, the real benefit will be an increase in job opportunities. And, with the latest report of a 9.1 percent U.S. unemployment rate, well above the average of 5.7 percent, more jobs could favorably position “Made in USA” manufacturing.

The “Made in China” label has become well known in households nationwide, making a sometimes rare “Made in USA” label more desirable. Although a preference for many U.S. consumers, the “Made in USA” label could present a problem as the U.S. plans for an economic turnaround. As USA Today explains, “The “Made in USA” label simply means that the product is made with “all or virtually all” components in the U.S.” This exclusivity could hurt the economy as consumers are discouraged from buying goods without the “Made in USA” label, simply because not all components were made within the U.S. borders.

For more information on the expected return of American manufacturing, click HERE.