Manufacturing Jobs To Shift From China To US, Report Says

Teni Sow | October 8, 2011 | 0 Comments

China’s swelling manufacturing sector has had Americans worried for a while.

Labor has been cheap and plentiful in China, and for much of the past decade, the ascent of industry in the People’s Republic has mirrored the erosion of blue-collar work in the U.S. The issue is complicated by accusations from American politicians and economists that China games the system by keeping the value of its currency artificially low — thereby making Chinese goods cheaper in the U.S., and American products more expensive in China.

But China is facing challenges of its own. The government’s one-child policy is putting a dent in the labor pool. Banks aren’t lending as readily as they used to. And with so many jobs available, Chinese workers can be a little more choosy about where they look for employment — meaning wages are getting higher. It’s more expensive these days to be a boss in China, or to own a business that manufactures there.

A recent note from the Boston Consulting Group suggests that all of this will work out to the advantage of the U.S.

The BCG analysis predicts that by 2015, labor costs in China will get so high that several industries will reach a “tipping point,” and decide to move the bulk of their Chinese manufacturing operations over to the U.S.

Makers of electrical equipment, furniture and autos and other vehicles are especially likely to relocate, the note says, and the result could be between 2 and 3 million new jobs in the U.S. — what BCG calls a “manufacturing renaissance.”

BCG’s case is optimistic, but not airtight. There’s indeed evidence that a manufacturing exodus from China is already underway. But many of the jobs appear to be going to other Asian countries where labor is even cheaper — places like Bangladesh, Vietnam, Indonesia and Cambodia.

And American workers may be in no mood to give manufacturers the kind of profit margins they want. Despite union-membership numbers falling to record lows, labor has lately been showing signs of life — like renegotiating contracts with Ford, Chrysler and General Motors, as 24/7 Wall St. points out, or pitching in with the Occupy Wall Street protest movement — that suggest a certain willingness to push back against companies that try to demand too much.

But that’s not to say that U.S. manufacturing couldn’t use a shot in the arm. Earlier this year, economists estimated that the dollar value of U.S. manufacturing output — which has recovered only modestly from the depth of the Great Recession — has fallen behind China’s, meaning that American manufacturing is in second place for the first time in more than a century.

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