Home > Cheap gas, stable wages behind US manufacturing competitiveness

Cheap gas, stable wages behind US manufacturing competitiveness


The resurgence of the United States’ manufacturing competitiveness has been noted in a Boston Consulting Group comparing the world’s top 25 exporters.

The BCG Cost-Competitiveness Index covering the nations, which together contribute about 9/10 of overall exports, in terms of wages, productivity growth, energy costs and exchange rates.

China rated number one overall for manufacturing competitiveness, followed by the resurgent United States, which had received a huge boost in its fortunes in the last decade due to energy costs, Reuters notes.

The US has seen natural gas prices cut by 50 per cent in the last decade, thanks to the country’s shale gas revolution. The country’s competitiveness was also helped by increased productivity and wage stability.

"Overall costs in the U.S. are 10 to 25 percent lower than those of the world's ten leading goods-exporting nations other than China," wrote the report’s authors.

BCG also noted that there were persistent misunderstanding about different markets.

“Many companies are making manufacturing investment decisions on the basis of a decades-old worldview that is sorely out of date,” noted BCG senior partner Harold L. Sirkin, who coauthored the report.

“They still see North America and western Europe as high cost and Latin America, eastern Europe, and most of Asia—especially China—as low cost. In reality, there are now high- and low-cost countries in nearly every region of the world.”

Overall, the US and China were followed by South Korea, the UK (western Europe’s cheapest manufacturing nation) and Japan.

As BCG analysts also noted last year, Mexico remains an affordable country for manufacturing – with lower average manufacturing costs than China – but was outside the overall top 10 due to issues including corruption.

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