Recent and growing wage increases benefiting Chinese workers have made trading companies and Western retailers that import from China aware of potential cost increases and disgruntled American and European consumers. Bruce Rockowitz, chief executive of a large trading company supplying Chinese consumer goods to American retail chains, confirms the expected increase, saying, “The companies’ average costs for goods rose 15 percent in the first five months of this year, compared with the same period last year.” The reality is business execs are now looking for manufacturing alternatives elsewhere in the world. Unfortunately, “Wages are rising as fast or faster in many of these potential exportering countries, following China’s example, while commodity prices have surged around the world, leaving buyers with few places to turn,” reports The New York Times.
U.S.A. Made Brands Back?
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.”
Even with an estimated seven 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 U.K., 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. 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.