November 06, 2011

Made In America Again

Manufacturing 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 06:38 AM | Comments (3)