08.28.2014 1

America a rising manufacturing star?

manufactureBy Rick Manning

The Boston Consulting Group just released a study comparing manufacturing costs around the world, and the United States fared surprisingly well.  Writing about the U.S. and Mexico, the authors explain the improved manufacturing environment saying, “Because of low wage growth, sustained productivity gains, stable exchange rates, and a big energy-cost advantage, these two nations are the current rising stars of global manufacturing.”

The big energy-cost advantage is the key.

While China struggles with higher energy costs, the United States is just scraping the surface of its natural bounty of fossil fuels.  The innovative unlocking of a vast sea of natural gas and oil over the past decade has transformed the United States’ position in the future of where world manufacturing will grow and prosper.  In fact, CNBC reports that natural gas prices alone have fallen by between 25-35 percent in the past decade in North America.  This drop in energy costs is contrasted by a 135 percent rise in natural gas costs in China.

And the U.S. manufacturing sector is beginning to respond with federal government measures of industrial production up 0.4 percent for its sixth consecutive monthly gain, the Federal Reserve reported last week. Manufacturing output advanced 1 percent in July, its largest increase since February.

CNBC quotes Hal Sirkin, a senior partner at The Boston Consulting Group saying that the old assumptions that manufacturing is cheaper in Asia and South America have “fundamentally changed.”

“This means companies will start to move manufacturing out of those expensive countries if they can, to cheaper countries like the U.S.,” Sirkin said.

Increased U.S. manufacturing means more much needed good paying jobs, and while the days of hundreds of workers operating alongside one another building a car is outmoded, a resurgent U.S. manufacturing sector is welcome in what has otherwise been a jobless recovery.

These are the exact kind of jobs that our nation still desperately needs as the Bureau of Labor Statistics has found that more than 7.5 million Americans are working part-time because they can’t find a full-time job.  What’s even more startling is that for the U.S. Department of Agriculture reports that the number of food stamp recipients remains at crisis levels with more than 45 million people receiving food assistance each month for three straight years.

Ironically, the very Obama Administration which purports to want to help those in need is pushing regulations like EPA’s proposed power plant rules.  Regulations that put the very energy cost advantage our nation currently enjoys at risk by deliberately driving up energy costs by closing down dozens of coal burning power plants.  The same agency is also pushing ozone standard regulations that the House Energy and Commerce Committee says “is already contributing to uncertainty and holding back investment.”

America’s free enterprise system and abundant natural resources have given our nation another opportunity to rebound from the moribund new normal of despair that President Obama and those of his ilk seem to embrace.

The only question that remains is whether America will choose a path toward prosperity or the continual downward drift to the ash heap of history.

Rick Manning is the vice president of public policy and communications for Americans for Limited Government.

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