November 18, 2014 posted in Planning
I recently posted on LinkedIn a link to a very interesting study released by Boston Consulting on the current state of Global Manufacturing. It’s a great study, but my take away from it, aside from the obvious information it gives, is the sanity check it delivers on what would otherwise be considered conventional wisdom and how wrong it can be.
For the last 30 years, the U.S. has been the poster child for tired technologies, non-competitive labor rates and a declining work ethic. However, multiple factors affecting manufacturing costs and competitiveness lead the researchers to state that “the rising stars of the global economy are” – ready for this? – “Mexico and the U.S.” This is attributed to improved productivity and moderate wage growth. The factors contributing to this rating include labor rates, electrical rates, natural gas rates and “other” factors. Not included in the other factors are Ease of Doing Business, Logistics Performance and Corruption Perception.
So the U.S. is a “rising star” in the global manufacturing economy. And, if we continue to get a hold of our own destiny through energy independence, this competitiveness will only improve.
I think this is a real wake up call for those that assumed the manufacturing sector was in serious decline in the U.S. Some prescient coverage has been written on the topic of “re-shoring” – manufacturers returning to the U.S. after establishing plants in China. When you look at the graphs in the Boston Consulting article, you begin to understand why. Standards of living are increasing, as are the needs to pay for those increased standards with higher wages.
But China is not alone. Brazil, Russia, South Korea and Taiwan are all relatively comparable to the U.S. As the USA is the largest market for manufactured goods, when you account for logistics, ease of doing business and corruption, the competitiveness of the U.S. manufacturing sector is even better.
So, the future is bright for the U.S. manufacturing sector. How are you going to take advantage of it?
“There is a tide in the affairs of men. / Which, taken at the flood, leads on to fortune; / Omitted, all the voyage of their life / Is bound in shallows and in miseries. / On such a full sea are we now afloat, / And we must take the current when it serves, / Or lose our ventures.”
“The highest exercise of imagination is not to devise what has no existence, but rather to perceive what really exists, though unseen by the outward eye–not creation, but insight.”