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October 24, 2011

This Guy Right Here Says America Is About To Rebound Like Crazy

I don't believe him. I side with Monty and DOOM.

But it's nice to hear some optimism.

Ambrose Evans-Pritchard offers a lot of it.

He starts off discussing the America's increasing energy production through frakking. Then he turns to manufacture.

Meanwhile, the China-US seesaw is about to swing the other way. Offshoring is out, 're-inshoring' is the new fashion.

"Made in America, Again" - a report this month by Boston Consulting Group - said Chinese wage inflation running at 16pc a year for a decade has closed much of the cost gap. China is no longer the "default location" for cheap plants supplying the US.

A "tipping point" is near in computers, electrical equipment, machinery, autos and motor parts, plastics and rubber, fabricated metals, and even furniture.
"A surprising amount of work that rushed to China over the past decade could soon start to come back," said BCG's Harold Sirkin.

The gap in "productivity-adjusted wages" will narrow from 22pc of US levels in 2005 to 43pc (61pc for the US South) by 2015. Add in shipping costs, reliability woes, technology piracy, and the advantage shifts back to the US.

The list of "repatriates" is growing. Farouk Systems is bringing back assembly of hair dryers to Texas after counterfeiting problems; ET Water Systems has switched its irrigation products to California; Master Lock is returning to Milwaukee, and NCR is bringing back its ATM output to Georgia. NatLabs is coming home to Florida.

Boston Consulting expects up to 800,000 manufacturing jobs to return to the US by mid-decade, with a multiplier effect creating 3.2m in total. This would take some sting out of the Long Slump.

If Chinese labor became too expensive, wouldn't out-sourcers turn to the newest cheap-labor country? It's not like China is the only country capable of producing widgets.

Craziest of all, he notes that America is the only Western economy with a fertility rate above replacement level, and so could, conceivably, grow its way out of debt.

So there you go. Some un-Doom.


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posted by Ace at 01:49 PM

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