US 100 vs China 96 Q The Boston Consulting Group: The Shifting Economics of Global Manufacturing How Cost Competitiveness Is Changing Worldwide August 19, 2014 https://www.bcgperspectives.com/con...tion_shifting_economics_global_manufacturing/ In some cases, the shifts in relative costs are startling. Who would have thought a decade ago that Brazil would now be one of the highest-cost countries for manufacturing—or that Mexico could be cheaper than China? While London remains one of the priciest places in the world to live and visit, the UK has become the lowest-cost manufacturer in Western Europe. Costs in Russia and much of Eastern Europe have risen to near parity with the U.S. (See Exhibit 1.) To understand the shifting economics of global manufacturing, The Boston Consulting Group analyzed manufacturing costs for the world’s 25 leading exporting economies along four key dimensions: manufacturing wages, labor productivity, energy costs, and exchange rates. These 25 economies account for nearly 90 percent of global exports of manufactured goods. The new BCG Global Manufacturing Cost-Competitiveness Index has revealed shifts in relative costs that should drive many companies to rethink decades-old assumptions about sourcing strategies and where to build future production capacity. To identify and compare the shifts in relative costs, we analyzed data in 2004 and 2014. The evaluation is part of a series of findings from our ongoing research into the shifting economics of global manufacturing. UQ
That's eye opening. China is almost at par with US in terms of manufacturing costs. The only reason China grew was its cheapness of labor and manufacturing. With cheapness gone what is going to keep its growth rate going? Certainly not its innovation ability.
It's not just labor that gave China and advantage. The government provides significant support to industry. I run a small manufacturing firm and when we compete with China, they can sell at below our raw material costs. The costs of metal should be the same for both of us. But, in my little micro world, recently, I am seeing China becoming less competitive and more and more manufacturers are looking to insource to build locally. For a particular sub assembly we need, we just found a US company that was cheaper than China *before* shipping costs were accounted for. The new threat is south east asia, the phillipines, and mexico for us.