The American manufacturing industry is stronger than ever. Even as the U.S. dollar rises above the Euro, as well as other currencies, more businesses are choosing to open up shop right here in the America. This belief was reaffirmed in a recent report published by the Boston Consulting Group (BGC).
According to the Chicago-based consultation firm, the U.S. still maintains a cost-advantage in the manufacturing industry over other countries. In order words, it’s cheaper to produce goods here in the U.S. as opposed to outsourcing and/or opening a factory overseas. Many people assume that it’s cheaper to produce goods overseas, largely because the wages are cheaper. Here in the U.S., business owners must pay their workers a minimum wage, which is usually several times more than the minimum wages set in other countries — and that’s if those countries even have minimum wages.
Just much money can companies save by opting to manufacture their goods here in the U.S. as opposed to overseas? The BGC report indicates that European exporters are paying roughly 10% more than the average of U.S. manufacturers. If a company were to manufacture its goods in the U.K. and then ship them here to the U.S., it will pay roughly 10% more than a similar company that chooses to manufacture its products directly in the U.S.
“While the major drop in the euro has reduced costs for European exporters, they’re still about 10 percent more expensive on average than U.S.-based manufacturers,” said Harold Sirkin, one of the co-authors for this report. “The U.S. remains one of the lowest-cost locations for manufacturing in the developed world.”
So, why is it cheaper for businesses to produce goods here in the U.S. instead of overseas? There are a few key factors attributing to this trend, including a greater emphasis on Made in America products. With the topic of U.S. employment becoming a hot debate, more and more people are beginning to realize the importance of U.S. manufacturing. This industry is solely responsible for the creation of millions of jobs. When a company chooses to open up a factory overseas, it eliminates tens of thousands of potential jobs while bolstering the economy of another country.