Will Manufacturing Jobs Return to the US?

Higher wages, energy prices overseas could increase American exports

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manufacturingThe outsourcing trend that has cost millions of manufacturing jobs in the US is expected to end, according to a global management consulting firm.

By 2020, higher US exports, combined with production work that will likely be “reshored” from China, could create 2.5 million to 5 million American factory and service jobs associated with increased manufacturing, according to a report by the Boston Consulting Group (BCG).

According to BCG, the US will capture $70 billion to $115 billion in annual exports from other nations by the end of the decade. The conclusion is based on shifts in cost structures that increasingly favor US manufacturing. One factor, for example, costs in China are increasing as workers there begin to command higher wages.

As a result, data indicates that the US is steadily becoming one of the lowest-cost countries for manufacturing in the developed world. BCG estimates that by 2015, average manufacturing costs in Germany, Japan, France, Italy, and the U.K.–will be 8 to 18% higher than in the US, on higher costs of labor, natural gas, and electricity. This means the US could capture up to 5% of total exports from these developed countries by the end of the decade.