By: Theresa Seiger, Raycom News Network
As the cost of labor and shipping goods from China grows, America could see the reversal of outsourcing trends with 2 to 3 million jobs coming to the U.S. as the manufacturing sector sees a resurgence.
A new report from the Boston Consulting Group predicts that seven sectors which make up approximately $200 billion worth of goods imported from China will shift work to America by the end of the decade. The change would lower unemployment by 1.5 to 2 percentage points.
“Companies are unveiling moves with increasing regularity,” said Justin Rose, a BCG principal and co-author of the report.
By around 2015, the report predicts the U.S. will be strong enough to seem more attractive to manufacturers than the currently popular China, thanks to higher productivity and cheaper costs.
Approximately 600,000 to 1 million jobs will come directly through manufacturing work while the rest will come through supporting services, such as construction, transportation and retail.
“This trend is still in the early stages,” said Michael Zinser, leader of the BCG’s manufacturing work in the Americas. “We expect it to accelerate as the new math of manufacturing increasingly favors the U.S. and as federal, state and local governments provide more support for companies considering opportunities to reshore work.”
The group said jobs will come to manufacturing sectors working with transportation goods, appliances and electrical equipment, furniture, plastic and rubber products, machinery, fabricated metal products and computers and electronics.
While the report said that the authors thought their estimates were “conservative,” not all research groups are optimistic about America’s future presence in manufacturing.
According to The Information Technology and Innovation Foundation, 5.5 million manufacturing jobs were lost from January 2000 to January 2010 – more than the number of similar jobs lost during the Great Depression.
The group believes that the recent uptick in manufacturing jobs, which has resulted in 444,000 new positions since January 2010, is unsustainable.
“American needs to wake up to the fact that a series of grave policy errors have left us a production foundation that is too weak to support the kind of economy we need to build,” said Robert D. Atkinson, president of the ITIF and chief author of a recent report from the Foundation on manufacturing job losses. “We will need new policies to build a new manufacturing foundation.”
But the BCG believes that the recent increase in jobs is just the tip of the iceberg.
“The U.S. manufacturing sector has gotten a lot more competitive over the past decade,” said Harold L. Sirkin, co-author of the BCG report and author of GLOBALITY: Competing with Everyone from Everywhere for Everything. “In recent years, companies have been paying much closer attention to the total costs of delivering a product made in China compared with making it closer to the end customer.”
A trickle of manufacturing jobs have already come back to the country, encouraged by the popularity of products made in the U.S. and the ease of delivery, among other factors.
“Rising Chinese wages are only part of the reason America is poised for a manufacturing renaissance,” Sirkin said.
An earlier version of this story said job growth would come entirely to the manufacturing sector. The growth will actually come because of the increase in manufacturing to that sector and supporting ones.