Made in America returns

Factory jobs are returning to the United States. So far it is only a trickle but the point is that the trend has begun to reverse and that’s good for America.The number of manufacturing jobs in this country has been growing over the last two years. Factories have added 300,000 jobs since 2009. In the first month of this year alone manufacturers have added 50,000 jobs, which was the biggest monthly increase in a year. Those numbers are positive and a good start but let’s keep the gains in perspective.Despite this recent progress, it still leaves us with 5.5 million fewer factory jobs than in July 2002 and 12 million less than we had in 1990. I don’t believe we will ever recapture the number of manufacturing jobs the U.S. enjoyed back in the glory days of the 1950s. Remember that back in the day (right after World War II), America was practically the only nation left standing. As such, we had little in the way of competition and accounted for 40 percent or more of the world’s manufactured goods. Over the next several decades, as both Europe and Asia rebuilt their export capacity, the United States experienced a dramatic loss of market share in everything from electronics to autos. Plants closed, jobs were lost. But by the late 1990s, America had reinvented itself and emerged as the leader worldwide in high-value industries such as pharmaceuticals, software, aerospace and other sectors.

***The emergence of China, India and other markets as low-cost producers of everything from toys to tin cans at the turn of this century triggered an exodus of American jobs as multinationals rushed to establish themselves. However, that wave is receding as economic forces erode these countries’ cost advantages. Ten years ago, a factory worker in China made 58 cents an hour. Today, wages are more than $3 and are expected to double in the next three years. In India, although a worker may make only half what his American counterpart is making, if you factor in other costs such as productivity, transportation, rising real estate prices, duties and supply chain risks, it now makes more sense to make some goods here.“Over the next five years the total cost of production for many products will only be about 10 to 15 percent less in Chinese coastal cities than in some parts of the U.S.,” predicts a Boston Consulting Group study done in August of last year. At the same time, China and India are focused on increasing domestic consumption of goods and services as opposed to simply exporting as much as they can.In the meantime, our workforce has become lean and mean. America is now considered a “lower-cost” country by many foreign multinationals that are willing to build plants and equipment here. They realize that U.S. workers have had no wage inflation for years and are far more productive and flexible than other competing work forces worldwide. If the dollar weakens over the coming years, there could come a day when appliances, televisions, computer equipment, furniture, machinery and plastics could once again be produced in this country. Who would have thought?Bill Schmick is registered as an investment advisor representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill@afewdollarsmore.com.