US is Manufacturing Rising Star, Which is Kind of a Bummer

Over the past several years, the government and the American people have been pushing for the rebirth of U.S. manufacturing. Government research initiatives, corporate support and consumer pressure have paid off; a recent report shows that American manufacturing has become more cost-efficient. For many in the industry, however, the news comes as a mixed blessing.

On April 25, 2014, the Boston Consulting Group (BCG) released the results of a study of global manufacturing costs. The report provided shocking contradictions to commonly held perceptions about manufacturing around the world. Efficiency has shifted over the past decade; according to the study, U.S. manufacturing is now the second most cost-competitive option in the world. China retains the top spot, though many believe that its improving economy and rising labor costs will soon push it down the list. The study also revealed that Brazil is now among the most expensive countries for manufacturing, while the United Kingdom is the most cost-competitive option in Western Europe.

According to the BCG study, the main factors affecting the affordability of U.S. manufacturing are decreasing natural gas prices and a lack of pressure to boost worker wages. The high productivity of American manufacturing companies has also driven up the country's rating on the BCG Global Manufacturing Cost-Competitiveness Index. Based on the dramatic shift in the U.S. manufacturing cost structures, BCG labeled the United States a "rising star" of global manufacturing.

The "rising star" status comes at a cost—largely, to U.S. manufacturing workers. Wage stability, one of the major factors in the BCG study, essentially means that American workers are getting paid less. According to a recent Reuters story, "stable wage growth" is a less-charged way to say that, when adjusted for inflation, as of 2014 current manufacturing wages are lower than they were in the 1960s. The study also points to the fact that natural gas prices in the United States have fallen by 50 percent since the shale boom in 2005. For people in and out of the industry, the excitement of the cost savings is tempered by environmental concerns about fracking.

For manufacturing workers, improvements in industry are reason for cautious optimism. Despite low wages, worker productivity has doubled since the 1960s. However, though more than 300 companies have brought their manufacturing operations back to the United States, workers should not expect a dramatic increase in jobs. Many companies are maximizing efficiency by implementing new manufacturing technology options like 3-D printers to increase productivity and decrease the workforce.

Though the sudden rise of U.S. manufacturing isn't bad news, it isn't as exciting as it seems on the surface. For manufacturing professionals who are willing to adapt and learn new skills, the changing industry promises to offer multiple opportunities.

(Photo courtesy of Stoonn / freedigitalphotos.net)