November 06, 2011Made In America AgainManufacturing wages in China have risen fourfold in the last 10 years. Factory real estate in coastal Chinese cities is now several times more expensive than it is in the Southern United States. Energy costs in China are up. And on top of all this, the yuan continues its inevitable rise against the dollar: the artificially low yuan cannot last forever because Chinese foreign trade reserves cannot grow without bound. All of these trends point in the same direction. Within the next decade - before my children are in the workforce - the cost advantages of outsourcing U.S. manufacturing to China will have evaporated, and the U.S. economy will begin to look very different again. The change will happen quickly. A report from BCG summarizing this thinking has been making the rounds and is worth a read. My opinion: it is a good time to be an American exporter and a bad time to be an importer. Good time to be a manufacturer and a bad time to be a retailer. If you can make a profit exporting goods to China today, then you are going to be rolling in profits in the next decade. A list of top U.S. exporters by container volume is here. This list is dominated by high-volume low-value exports (trash and paper). Missing are companies like Boeing or Intel that do not use a lot of container space. What would be more interesting would be a good listing of exporters by dollar value. Posted by David at November 6, 2011 06:38 AMComments
That's an upbeat analysis of the trend for American jobs...Correct if we assume that China and the US account for the majority of trade with each other and there are no countries with low labour other than China. In other words bunkum. Posted by: Justin at February 19, 2012 04:00 PMI find it interesting that a few days after the "Halftime in America" commercial I get political commentary on this post. I'm just trying to be helpful, but in the four months since this post, I've seen 25% gains in American manufacturing export stocks (BA, DE, DOW). I'm happy to have my posts be ignored you'd like to disagree on principle. I still think there are more gains ahead, if you'd like to participate. Justin, you seem pretty determined to find another boogeyman, but I'm interested: who do you fear next? What has made China formidable in the last couple decades is its combination of low-wage workers, a thousand-year-old educational tradition, industrial infrastructure imported from Taiwan to Shenzhen, and modern finance and law imported from Hong Kong. It is not easy to compete with the U.S., but China put together the pieces and did it. Now several of their structural advantages are running out and the playing field is leveling. The survivors in America are poised for major wins. It will be hard to beat decades of avionics knowledge and the safety record of Boeing; the agricultural power of midwest soy producers; or the North American advantage in ethelyne-based chemical manufacturing. Who is the next manufacturing superpower? If not America and not China, who should we invest in next? Posted by: David at February 20, 2012 05:57 AMHi, David, Post a comment
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