U.S. manufacturing underwent a very successful July, based on the Institute for Supply Management’s monthly factory index. The ISM index sprung to 55.4 in July — up from an average of 50.2 from April to June this year, and far exceeding industry expectations (any score over 50 denotes growth). Lower domestic energy prices, along with economic uncertainty in other key global manufacturing regions like China and Europe have played a pivotal role in influencing long term manufacturing growth for America.
Competitive Advantages
As Your Energy Blog wrote about back in June, U.S. manufacturers have established multiple competitive advantages in the global market. John F. Floyd of the Gadsden Times cites lower manufacturing costs in comparison to many notable countries as a strong indication of a manufacturing resurgence. “High wages, very restrictive labor contracts and more expensive energy costs for Europeans have all accounted for [manufacturing cost] disparity,” Floyd notes. The end result are costs 7 percent lower in the U.S. compared to England, 18 percent lower costs than Germany, 17 percent lower than France, 19 percent lower than Italy, along with 13 percent lower than Japan, and 3 percent lower than Canada.
A similar report was released in April by Alixpartners, illustrating that the U.S. has caught up to Mexico in terms of manufacturing “attractiveness,” based on a survey with executives in the industry. In the same report, Alixpartners stated the U.S. will be on par with the manufacturing costs of their largest industrial competitor, China, by the end of 2015. While some industries will remain more viable overseas for many years, there’s a definite transition occurring in favor of the U.S.
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