Oct. 6, 2011 -- Two million to 3 million U.S. jobs could be created in the next five years as "Made in America" manufacturing becomes more economical in the United States, according to a new study by the Boston Consulting Group.
"About 10 years ago, we started outsourcing things like appliances and computers, and a significant amount of goods that make up a lot of U.S. manufacturing," said Harold Sirkin, lead author of the study. "That's now changing because of what's going on in China. Wages are rising rapidly, and U.S. [labor] is four times as productive as Chinese labor. ,,
"So as China labor goes up in price, it becomes more economical to produce goods in the U.S.," Sirkin said.
The study found that the sectors most likely to return would be transportation goods, electrical equipment/appliances, furniture, plastics and rubber products, machinery, fabricated metal products and computers/electronics. They account for about $2 trillion in U.S. consumption per year and nearly 70 percent of U.S. imports from China.
'Tipping Point' Has Started
According to the Boston Consulting Group, these industries could add $100 billion in output to the U.S. economy and lower the U.S. nonoil trade deficit by 25 percent to 35 percent.
Sirkin said a "tipping point" in which certain goods would be more economical to make in the United States, had already started.
"It's still slow, but companies are moving goods back from China, back to the United States," he said. "A few days ago Ford announced that they were moving 12,000 jobs back from Mexico and China because of an agreement with [the United Auto Workers] -- that makes those jobs productive."
He said more and more companies were deciding that "made in America" simply made more sense.
One of those companies is tire maker Continental AG, which announced Thursday that it was building a half-billion-dollar plant in Sumter Counter, S.C. The new plant would manufacture car and truck tires for the U.S. car market, and bring 1,600 jobs to the area. It is a major turnaround in an industry that for the past decade has seen plants shuttered in the U.S. in favor of overseas operations.
"If you have goods close to the customer, you don't have all that inventory sitting on that water," Sirkin said. "Companies are beginning to realize this as costs get narrower and narrower. It's a difference, and they are starting to move plants and equipment back to the United States."
He said for U.S. companies it had become an economic question, not necessarily a patriotic one. No matter the reason, for the Americans desperately in need of jobs, news that more companies might be hiring is always welcome.
Farouk Systems USA, a hair dryer company in Houston, has seen that firsthand. It has already brought 1,200 jobs back from China recently, giving people like Patricia Benitez, a wife and mother of four, a shot at a new future.
Sirkin said there were ways to speed up the return of companies to the states.
"There are incentives that can be made by the government that would help make that transition easier because it may not be economic for companies over the next two to three years but will be in the next five," he said. "There can be incentives that can be made over taxes."
Sirkin also had advice for consumers in the U.S., where 75 percent of consumer goods are currently made.
"It would be nice if people could focus on 'Made in America,'" he said. "We could move that number from 75 to a larger number, and that would create a tremendous number of jobs. ... You can move the needle by 2 [million] or 3 million jobs by just some small changes."