Manufacturing Will Not Die

It can’t. People want things and until things are created via spontaneous combustion, nuclear reaction, or other scientific “cloning” methods, someone will continue to manufacture them.

It’s not a question of “if” but of “where.” Manufacturing locations are based on a few considerations, which more and more countries can meet. Water and energy are basic. The technical ability to meet requirements is another fundamental question.  Then strategic choices can be made.

Close to raw materials or to customers is another decision point. Sometimes we get both. Then there’s costs. Labor is a small portion of overall cost in most manufacturing industries, with materials and overhead contributing the rest. Overhead includes government regulations and related external factors as well as company specific issues.

High labor content manufacturing is likely to continue moving to every-evolving low cost countries.  For those industries, cheap labor may be the holy grail.  But for most, cheap labor is not the critical strategic issue.

Any country with sound infrastructure can become competitive.  If the US wants to continue as a major player in manufacturing, it must focus on technology, speed, and reduced overhead and competitive raw material pricing. 

Reducing overhead is not the same as reducing labor, but is equally possible and more productive in the long term.

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