More on the U.S. Manufacturing Renaissance

CHICAGO, October 7, 2011—"Transportation goods such as vehicles and auto parts, electrical equipment including household appliances, and furniture are among seven sectors that could create 2 to 3 million jobs as a result of manufacturing returning to the U.S.—an emerging trend that is expected to accelerate starting in the next five years, according to new research by The Boston Consulting Group (BCG).

The BCG analysis identifies those broad industry clusters that are most likely to reach a “tipping point” by around 2015—a point at which China’s shrinking cost advantage should prompt companies to rethink where they produce certain goods meant for sale in North America. In many cases, companies will shift production back from China or choose to locate new investments in the U.S. The U.S. is also expected to become a more competitive export base in these sectors for Europe and Canada.

“A surprising amount of work that rushed to China over the past decade could soon start to come back—and the economic impact could be significant,” said Harold L. Sirkin, a BCG senior partner and lead author of the analysis. “We’re on record predicting a U.S. manufacturing renaissance starting by around 2015. Now we can be more specific about which industries will return and why.”

In addition to transportation goods, electrical equipment and appliances, and furniture, the sectors most likely to return are plastics and rubber products, machinery, fabricated metal products, and computers/electronics. Together, these seven industry groups could add $100 billion in output to the U.S. economy and lower the U.S. non-oil trade deficit by 20 to 35 percent, according to BCG.

The tipping-point sectors account for about $2 trillion in U.S. consumption per year and about 70 percent of U.S. imports from China, valued at nearly $200 billion in 2009. The job gains would come directly through added factory work and indirectly through supporting services, such as construction, transportation, and retail."

HT: Robert Keuhl

Related: China Labor Costs Push Jobs Back to U.S.  (HT: Scott Lincicome)