President Obama is hailing a U.S. manufacturing sector that recently managed to add jobs after being dormant since 1990. Significant investments in US manufacturing capacity, such as the $4 billion Dow Chemical, $32 million Flextronics and $600 million Airbus planned investments, suggest that big corporations are seeing benefits to invest in manufacturing capacity in the US at the expense of upgrading or building new facilities in developing countries. What’s behind this apparent “reversal of trend”?
Read the outcome of L.E.K. Consulting’s study involving decision makers from 10 manufacturing industries in the U.S.:
“The media has been full of reports lately about a renaissance in U.S. manufacturing. The cheerleaders cite an array of heartening examples, including a $4 billion investment by Dow Chemical to boost its ethylene and propylene capacity on the U.S. Gulf Coast, an announcement by Flextronics of plans to create a $32 million product innovation center in Silicon Valley, and a decision by Airbus to build a $600 million assembly line in Alabama for its jetliners. These stories have prompted much talk about the “reshoring” of manufacturing jobs to the U.S. from China and elsewhere. Indeed, President Obama recently hailed “a manufacturing sector that’s adding jobs for the first time since the 1990s.”http://blogs.hbr.org/2014/06/the-rebirth-of-u-s-manufacturing-myth-or-reality/
It makes sense that going forward, the majority of commoditised products will still be manufactured in countries where labour cost is significantly lower – whereas sophisticated manufacturing that requires advanced skills and facilities such as 3-D printing be moved closer to the experts, to avoid any delays the development process.
So, it seems that growth in complex industries is in the American horizon specifically in the field of defence and aerospace.
Image Source: Infographic
Insights by: Jürgen Strauss