Friday, November 9, 2012

Why a resurgence in US manufacturing may be the next big bet?


Hi There,

I wanted to find the time this week to discuss and share my thoughts about the manufacturing sector here in the US. I think this is an important topic as it concerns our nation economic growth, but also it can have a positive/negative impact for many ERP consultants, and Microsoft Dynamics AX implementers.

I found an excellent study about this and after reading it, I do see the manufacturing trend being positive for the US as China no longer is the cheapest and most efficient place to do this. In addition, shipping, labor, and distribution costs are rising rapidly.

In addition, the U.S. has experienced the longest stretch of employment gains in manufacturing in almost two decades. Even though our economy is growing slowly … it is growing. There have been many “green shoots” in the economy from housing to autos to manufacturing. I beleive that the U.S. has had to learn how to transition from the post-bubble, post-recession economy in a strong, sustainable way.

Form the source:

"The manufacturing sector in the US is rebounding. Is this a cyclical recovery or could it be an indication of a more sustained one? PwC looks at possible structural changes in seven key areas that could lead to a sustained recovery and help reverse the offshoring of R&D and production in the manufacturing sector.

The key factors that could impact reshoring decisions include labor, materials, transportation/energy costs, market demand, the availability of talent and capital, tax rates, and currency fluctuations."
Until the next time.


  1. Eduardo,

    Thanks for sharing, these could be greats news indeed, not only for the US, but for Canada and Mexico also.

    Kind Regards

    Arturo Medina ##

    1. Yes, it seems that China will no longer the center of focus for manufacturing. Needles to say, the dollar devaluation is not inviting investors to manufacture in China anymore, but Mexico is a good place to start as the shipping cost are lower, and the whole logistics approach is easier.

      Thanks for reading my blog, Arturo.

  2. In my opinion, the folks at PWC got this call right Eduardo. As they cite in the article though, this is not a tide that will raise all boats within the US Manufacturing community. Reshoring trend in the US today heavily favors production environments with high dependence on engineering innovation where competitive excellence is achieved through automated production methods and speed to market. The PWC article does a good job of defining a heat map for US industries that are better positioned to benefit from this trend. Manufacturing industries where labor is still a primary cost factor are still much more likely to remain based in other regions of the world and will move around the world to follow the lowest total unit cost per labor hour worked.

    1. Jack,

      Thanks so much for sharing your opinion on this topic. Yes, I do agree that PWC does a good job identifying a number of industries that will be able to compete with the trend.

      Great thoughts, Jack.

  3. No wonder it's becoming cheap to produce in US when the government is printing money like never before. Hyperinflation on its way?

    1. I'm not sure. I think that the devaluation of the dollar just makes looking at the overseas game a bit different in terms of "real cost".

      Thanks for participating!


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