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Manufacturing jobs returning to the U.S.

Some may believe that China is the largest manufacturing nation in the world. Although their growth in manufacturing has been explosive, the U.S. still posts the largest manufacturing numbers, and manufacturing that once was going overseas is coming back.

Photo by Robert Scoble via Flickr

According to an article in Businessweek some manufacturers who had previously outsourced are bringing production back to the U.S. slowly. Among these are Caterpillar, Ford and General Electric. The two factors that drove U.S. manufacturing overseas, cheap fuel and labor have been somewhat negated.

In 2002, the average price for a barrel of oil was $22.81, and last year was at $87.48. This had increased the price of shipping. Also, wages in China have risen 15 percent a year since 2002. Then take into account that the dollar has declined by 23 percent against 20 other currencies since 2002. The result of the dollar’s deficiency was that factory labor costs fell 11 percent in the U.S. from 2002 to 2010, according to the Bureau of Labor Statistics.

U.S. metal and chemicals industries are wooed by the cheapness of natural gas in the U.S., whereas China’s price of natural gas is twice as expensive.

Another factor making manufacturing in the U.S. more attractive to U.S. companies are the liabilities of a global supply chain that were made apparent by natural disasters in Japan and Thailand that crippled production.

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