It wasn’t long ago when everyone was convinced that all American manufacturing jobs would end up in China permanently. Before China, manufacturing was sent overseas to Japan and Taiwan. Due to the low cost in these areas, many manufacturers went overseas. New research from the Boston Consulting Group, however, shows that China and the U.S. are now almost equal when it comes to manufacturing costs. That brings up the question, where will manufacturing go next?
Due to rising labor costs and a burgeoning middle class in China, along with higher productivity in the U.S., offshore manufacturing will soon be looking for a new home. According to this article from BusinessWeek, some countries with low manufacturing costs include Indonesia, India, Mexico, and Thailand.
The key here is not just low cost labor, but also access to transportation, political stability, skilled workers, and a solid infrastructure. Some experts believe it is only a matter of time until Africa becomes a player in the manufacturing field, thanks in part to heavy infrastructure investment from China, as seen in this report. Africa is a place of huge potential with many natural resources—we also think it is only a matter of time until manufacturing enters this area.
As is the case with any area, the natural evolution of manufacturing and its effect on the economy forces manufacturers to move around for lower costs. Manufacturing is consistently searching for the next area that is the best place to get parts made. In the end, it is difficult to predict where manufacturing will end up after China, but it is clear that the tide is changing quickly. At Universal Polymer, we hope that America’s manufacturers can take advantage of this dramatic shift and make the U.S. a domestic manufacturing power once again.