Assembly line renaissance

Are manufacturing jobs are making a comeback?

Eighteen thousand is an abysmal number when it indicates the number of jobs the world’s biggest economy created in a month. Unfortunately, that’s how many new positions U.S. employers added in June, the Department of Labor announced two weeks ago—a bulletin that sank the hopes of the country’s 14 million unemployed. Yet, there is at least one sector of the U.S. economy that seems poised for expansion, bringing with it a much-needed fistful of new jobs: manufacturing.

Assembly lines and factories—which seemed to be going the way of the dinosaurs in recent decades in North America—are making a comeback. The Boston Consulting Group predicts “a manufacturing renaissance” in the U.S. in the next five years, courtesy of rising wages in China and high fuel prices, which make it more convenient for companies to relocate production lines back home. With Chinese workers pocketing wage increases of about 17 per cent per year, the yuan appreciating, and U.S. states such as Mississippi, South Carolina and Alabama offering flexible work rules and government incentives, the difference between production costs in China and the U.S. will “drop to single digits or be erased entirely” in certain sectors in the next few years, notes the BCG. Last week, General Electric said its U.S. manufacturing operations will grow this year, as labour becomes a smaller component of its costs. Caterpillar Inc. announced last year the expansion of its U.S. operations, a move expected to add 500 new jobs—or 2.7 per cent of the jobs the entire U.S. economy added last month. Other prominent U.S. manufacturers have also relocated operations at home.

Offshoring is becoming démodé elsewhere in the West as well. New Call Telecom, a British company, recently opened a new call centre in Burnley, near Manchester, reportedly because commercial property there is as cheap as in Mumbai—as low as $6 per square foot. In Canada, though, the picture is mixed, according to a recent report by the Department of Foreign Affairs and International Trade, with a roughly equal number of manufacturers offshoring and inshoring.