This week I wanted to do a quick write up on the encouraging new report released by PricewaterhouseCoopers (PwC) titled, ‘A homecoming for US manufacturing? Why a resurgence in US manufacturing may be the next big bet.’
The economy has become a hot button topic for many Americans, as we all struggle to find the right answers amongst the political favoritism and skewed figures. Such is the reason why this report could not have been released at a better time for the American public to see a realistic view of where we stand (and where we could stand in the future) as a global economic player.
The report breaks down 7 economic factors explaining how recent global developments has paved a path for US manufacturing to see signs of life in the near future; Transportation and energy costs, currency fluctuations, US market demand, labor costs, US talent, availability of capital, and the tax and regulatory climate will play a vital role in the months, years ahead.
For the sake of keeping it brief, I will only mention the most crucial factor listed in the article. One of the more definitive aspects is the rising global costs of transportation. After an abrupt price decline three years ago, crude oil, jet fuel, and diesel have all returned to the elevated cost levels of yesteryear. Couple that with the recent influx of affordable natural gas on this side of the pond and there is clearly a competitive advantage being established with remaining local. Energy costs are especially hurtful for companies that produce goods costing the most to ship, such as heavy machinery.
Aside from the actual reduction of shipping costs in terms of miles, the report also indicates domestic production ‘cuts down on lead times (e.g., design changes can be implemented more quickly), reduces required inventory levels, mitigates some currency risks, and gives more control over intellectual property.’ So not only is going local becoming more cost-effective for many sectors, it’s also improving efficiency within company walls.
To find out more, read the entire PDF report from PwC on their company website here – http://www.pwc.com/us/en/industrial-products/publications/us-manufacturing-resurgence.jhtml
– or a breakdown of the report here - http://www.logisticsmgmt.com/article/pwc_says_u.s._manufacturing_resurgence_may_lead_to_job_growth/#.UFHp0LF5in8.twitter
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