U.S. Manufactures return home from China

People are starting to notice that the world’s manufacture industry is facing a renaissance. Boston Consulting Group (BCG), a global management consulting firm discerns that within five years, more and more U.S. corporations would return home from China.

In fact, the trend is already begun. Famous construction machinery company Caterpillar Inc. decided to build its next manufacturing factory in Texas. NCR Company also planned to change its manufacture base of automated teller machines back from China to Georgia. The iconic toy manufacture, Wham-O Inc, planned to repatriate 50% of its Hula Hoop and Frisbee production from China. BCG said that many more corporations are taking such decisions due to the wage rates increase for skilled workers in China.

Yes, it is the truth. All over China, wages are increasing at the rate of 15% to 20% percent per year. “We expect net labor costs for manufacturing in China and the U.S. to converge by around 2015.” said Harold Sirkin, a BCG senior partner, in a release. It means that in the next five years, we would see more products “Made in USA”. At current rates, China’s wages would double in about five years.

Anyway, China will still remain a hugely important manufacturing base for the long term, according to BCG report. But mostly it will serve the high-wage economies of Western Europe which will remain uncompetitive. Other low cost countries, such as Vietnam, Indonesia and Thailand will compete with the low-cost Americans. But these Southeast Asia countries are just lack of the tangible and intangible benefits that the U.S. offers. So while choosing Texas, Caterpillar take consideration the efficient ports and “positive business climate.”

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