Renaissance in the American Manufacturing Sector

A recent Forbes article explained the reasons why manufacturing may be coming back to the U.S. for the long term.

Many manufacturers are increasingly reevaluating their U.S. strategies, such as their separation of R&D and production, and their production abroad and importation back to U.S. buyers. Depending on the industry, they may find considerable benefits in establishing regionalized supply chains and R&D facilities in the U.S., including reducing costs, shortening lead times, protecting intellectual property, and avoiding many of the risk factors of developing markets.

The Forbes article also cites the gap between overseas manufacturing and domestic manufacturing costs closing, making it even more likely that more manufacturing will return to the U.S.

The appreciation of the yuan relative to the U.S. dollar may continue longer-term as China’s economy grows, which could further help U.S. manufacturers.

The U.S. manufacturing industry looks like it’s in for a resurgence:

U.S. demand remains supreme. Although China and other emerging markets are expected to keep having faster gross domestic product growth than the U.S., our advantage in wealth, in real GDP per capita, is expected to persist, dwarfing China and other emerging markets. This difference in  standard of living, as well as the size of the U.S. market, supports investment in the domestic production of goods targeted for U.S. consumption.

All these considerations, as well as labor costs, are affecting manufacturers’ decisions whether to establish production facilities in the U.S., closer to their domestic customers. Can we expect an increase in re-shoring as a result? Will “Made in USA” become more common? Only time will tell, but a wide range of signals now suggest a potential renaissance of the U.S. manufacturing sector.

Eagle Technologies Group is an industry leader in the design and installation of factory automation systems worldwide.

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