"Made in America" comeback

Discussion in 'Economics' started by olias, May 12, 2011.

  1. olias



    "U.S. exports hit a record $173 billion in March, up 15% from a year-ago and 37% from 2009. The good times for "Made in America" are just getting started, according to a new study from The Boston Consulting Group (BCG).

    In fact, BCG predicts 2015 will be a tipping point of sorts, when global manufacturers will view the U.S. as equal to if not better-than China, senior partner Harold Sirkin tells me in the accompanying video.

    "We're not saying the world's going to suddenly change and U.S. companies are going to manufacture here for shipment to China," Sirkin says. "But the U.S. will be a very important place if you're going to sell into the U.S."

    In making this seemingly outrageous forecast, Sirkin cites the following:

    Rising wages in China plus the strengthening yuan are eroding China's cost advantage vs. the U.S.
    America's "very productive, motivated and flexible workforce" is attractive to employers and all aspects of U.S. society — including unions and state governments -- are "focused on creating jobs."
    Intangibles such as the length of the supply chain and the challenges of communicating over multiple time zones work to the advantage of the U.S. (The same is true of Mexico, which BCG says is "also poised to benefit as a low-cost alternative" to China.)

    For the record, BCG's forecast is based on the U.S. regulatory and tax environment remaining the same. This is about "pure economics," Sirkin says. "If you improve tax rates and regulation, it'll only make the trend happen faster."

    Clearly this forecast runs against conventional wisdom. But conventional wisdom also holds that America "doesn't make anything anymore," which isn't true either. Since 1972, U.S. manufacturing output has risen nearly 2.5 times, according to BCG.

    But U.S. manufacturing employment has fallen nearly 25% in the same time period and few consumer goods are made here anymore, which is why it "feels" worse than the reality; if BCG is even half right, that's going to change for the better soon."

    Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @atask or email him at altask@yahoo.com
  2. Of course what this article doesnt say is that the US is the #2 gold producer in the world and in 2009 gold went up about 20% and 2010 it went up about 40%. Coincidence that those percentages nearly match the export percentages? hmmm.
  3. bone

    bone ET Sponsor

    1. The stealth purpose for QE was (and is) in my opinion, to deflate the dollar to the point where US manufacturing is again attractive in terms of currency differentials to the rest of the world.

    2. Manufacturing sustains outside jobs in the service and technical support sectors. The German economy is very impressive with the quality of the goods they produce and the influence that manufacturing has on their economy.

    3. There has been 'blowback' at the grassroots level here in the US, and common folks look to buy US made products. Personally, I will pay up to about a 25% premium for US made products. I have personally given up on the reliability of Chinese products beyond a very basic product that would be difficult to screw up. With the very basic goods, there might not be native US manufacturing.

    4. US landfills are overflowing with Chinese-manufactured broken and defective goods. The broken stuff also gets re-cycled and sold back to the Chinese as scrap so the process can get repeated all over again.

    5. US manufacturing trends have decidedly shifted to precision goods that demand quality design and materials; these higher quality goods also can maintain a larger profit margin. Case in point: medical devices.

    6. US and European high tech companies are sick of getting IP ripped off by the Chinese, and are now shifting to a policy where only the basic commoditized sections of their product lines are manufactured in China.
  4. iprph90


    a watershed moment would be if u.s. car manufacturers can match the quality of their japanese counterparts.......this would truly spark a "made in america" comeback.
  5. In 5 years, US auto market will be flooded with Chinese small cars and electric cars in which American companies have no advantage.

    Just wait 5 years and Detroit will be even worse
  6. agreed. quality has improved substantially the past 5 years but, IMO, has a ways to go.

    I want to buy a US car, roll 100k miles, and not have everything feel like it's loose.
  7. bone

    bone ET Sponsor

    Please google 'Honda Odyssey automatic transmission reliability' , or 'Nissan 2.5 engine oil burning', etc. etc.. They have plenty of problems to go around. And Mercedes is in the dumpster in terms of product quality.

    As a current owner of 3 Nissans and 1 Honda I would opine that your statement was much more relevant ten years ago than at present. And I use synthetic fluids and follow the severe service maintenance schedules.

  8. bone

    bone ET Sponsor

    Paying someone 25 cents an hour to plug a silicon microchip into a slim metal case and call it an iPod is one thing, but if Chinese cars resemble even vaguely the crap being pushed at Harbor Freight then I can't picture it.

    Why are GM products like Buick so popular in China ?

  9. Chronic weakness of the US Dollar is the wind at the back of exports (and conversely a slight barrier to imports sans Chinese)

    I will say a Bic Mac in Portland ME tastes exactly like one in Portland OR. It's down to a science. Not THAT'S manufacturing and why MCD is in the DJIA.

    Hopefully some of you can discern "tongue-in-cheek".

  10. Yes, Harbor Freight's wares pale to Danaher, or Snap-On, but IF it's tools you don't use often or a one time shot, they are definitely a better value. In essence they have their place.

    It also reinforces that anything worth a shit, made in the US, costs and arm and a leg.

    Lastly, IF you know of any car alternator manufacturers in the US, please let me know. Ole'!
    #10     May 13, 2011