How the US got its manufacturing groove back

William F. Shughart II
Shale revolution revitalizing U.S. manufacturing
Energy is the real key to America’s manufacturing boom. A report on the health of the U.S. manufacturing sector, released last year by Boston Consulting Group, projected that natural gas and electricity would account for just 3 percent of manufacturing costs this year. In contrast, natural gas and electricity were projected to account for 7 percent to 13 percent of manufacturing costs in Japan and Europe.

The latest data from BCG have revealed that China’s manufacturing cost advantage over the United States – the source of so much hand-wringing over the years – has fallen from 14 percent in 2004 to just 4 percent today. As Chinese wages continue to rise, and Chinese energy prices probably as well, don’t be shocked to see U.S. manufacturers close the remaining gap quickly.
It is easy to see the renaissance  on the Texas Gulf Coast where both foreign and domestic companies are investing billions in the petrochemical business which uses the cheap natural gas.


Popular posts from this blog

US, Britain and Israel help Iranian nuclear scientist escape

Iran loses another of its allies in Iraq

The Democrat screw up on the 80% rule for insurers