The future of manufacturings

Fred Mitchell
Prototype Machinist
Chris King Precision Components
Years with company: 21
Oregon employees: 97

Many may look at the downward trend in manufacturing employment and argue (or simply assume) that the manufacturing sector’s role in the U.S. economy will continue to wane. Some may also argue that manufacturing will continue to lose workers due to technological advancement or competition from countries with lower labor costs, etc.

But a growing chorus of experts have begun to see signs of a manufacturing resurgence in the U.S. as the country’s manufacturing sector still produces more output than any other country. Additionally, approximately 75 percent of the manufactured products consumed in the U.S. are made in the U.S.11 American-made products constitute substantial majorities of domestic consumption in many sectors, including food and beverages, wood and paper products and transportation goods12

Randy Mulford
Emerson Hardwood Group
Years with company: 16
Oregon employees: 64

A growing number of experts argue that, for some manufacturing, the advantages of moving production offshore may diminish.13 A recent analysis by the Boston Consulting Group (BCG) suggests that by 2015 it may become more economical to manufacture many goods in the U.S. due to rising wages and currency appreciation in China.

Examining both labor costs and shipping costs, BCG clusters industries into three main groups: industries likely to remain in the U.S.; industries likely to remain overseas, and “tipping point” industries.

Tipping-point industries are those for which bringing production back to the U.S. may make more sense over the next several years. Seven tipping-point industries are listed in Figure 11.

The BCG report argues that this potential re-shoring of manufacturing puts the U.S. “in a strong position to add 2 to 3 million jobs in a range of industries and an estimated $100 billion in annual output by the end of the decade.” Given Portland-metro’s existing capacity in several of these areas, Portland-metro’s manufacturing sector is likely to benefit if these projections are realized.

Finally, other experts argue that manufacturing stands at the precipice of a “third industrial revolution.”14 Proponents of this view argue that technological advancements will lower production costs and increase production flexibility. In particular, these advancements may reduce labor requirements, reducing the advantage of moving production off-shore due to lower wages and encouraging producers to bring some of their work back to the U.S. and other countries15

Ultimately, no one can predict the future. The arguments outlined above may come to fruition or they may not. Nevertheless, it’s clear there are several plausible economic forces and trends that may help boost manufacturing in the U.S. and in Portland-metro.

11 Sirkin, H.L., M.Zinser, D.Hohner, and J. Rose (2012) “U.S. Manufacturing nears a tipping point” bcg perspectives.

12 Sirkin et al (2012)

13 Sirkin et al (2012)

14 The Economist devoted an issue (April 21, 2012) to this topic.

15 The Economist.