3 Reasons the U.S. is Still On Top of Global Manufacturing

By Amanda Earing, News Editor, Manufacturing.Net – November 03, 2009

While U.S. manufacturing jobs have shrunk from 20 million in 1980 to about 12 million today, the U.S. has never been more important in global manufacturing. Manufacturing.net spoke with Dr. Chris Kuehl, Economic Analyst, Fabricators & Manufacturers Association, to learn what he believes the future holds for U.S. manufacturing.

How is it possible for U.S. manufacturers to compete against China when they hold a large portion of our debt and have fewer regulations imposed on their manufacturers?

Dr. Kuehl: There are three things that give U.S. manufacturers a bit of an edge even with China in the picture.

First — and on a more temporary level — the weakness of the dollar. With the dollar down at the level it currently is, we’re essentially discounting anything we sell internationally. But at some point, that advantage begins to go away.

Second, China is still a fairly rudimentary manufacturing culture. They do have a few sophisticated sectors, but China’s specialty is the labor-intensive, mass-production items for WalMart. The U.S. continues to be a more high-value manufacturer and our biggest competitor would be Europe more than it would be Asia. Again, that will change over time. We certainly have some Chinese companies that are becoming more competitive but they are still few and far between.

Third — the single biggest advantage and the one that would be the most consistent — is simply that US manufacturers are closer to their markets. Being closer hasn’t been a huge issue in the last 10 or 15 years, but if you track what is happening with the energy crisis, it becomes more expensive to bring things from various distant and drawn out supply chains. So you began to see, particularly if oil prices come back up, more incentive to produce closer to the consumer. You now have much more customized, specialized manufacturing and smaller lots. Consumers are no longer content with mass production and that makes it even more important to be closer to your ultimate destination.

Those are the three biggest factors. And certain U.S. companies will have other advantages as well because of their patents and process and the work forces they have.

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