Manufacturing prosperity: it's just around the corner

The Association for Manufacturing Technology (AMT) used the International Manufacturing Technology Show in Chicago in September as a forum to deliver its views that North American manufacturing is on the cusp of a boom unprecedented in the last 25 years, due to several critical factors converging over the next 12 months.

"Shipping costs and the [lack of] availability of affordable raw materials will reduce the ability of overseas manufacturers to continue domination of U.S. and European manufacturing in many categories," says John B. Byrd, III, president of AMT, McLean, Va. "As these market forces converge, they will create upheaval in the international manufacturing sector, the result of which will be a boom in the North American manufacturing sector unlike anything we have seen in the last quarter-century."

Since the end of 2002, Byrd points out, the costs of shipping steel and scrap metal to China has tripled due to rising demand for construction of manufacturing plants, autos, and consumers good in China. While many North American manufacturers have been outsourcing production to China due to low labor rates, the rising costs of export shipping will begin to offset that advantage. With more companies competing for space on a finite number of aging vessels, moving goods and raw materials to and from China also is going to lengthen delivery and increase prices, AMT asserts. At the same time, U.S.-based production could take advantage of the less-expensive rail shipping.

As if that wasn't enough, rising productivity of North American manufacturers is driving down unit labor costs. And while U.S. manufacturing costs have been favorably impacted by the strengthening euro, this same development puts increasing pressure on China to revalue the yen.

"Forward-thinking manufacturers should begin making strategic purchasing and product-development decisions now," Byrd says. "Over the next 12 months, North American demand for goods in the retail and industrial products sectors is likely to remain stable or increase."