Five million manufacturing jobs could be added by 2020

September 21, 2012

Increased productivity in U.S. factories may see 5 million nationwide manufacturing and support jobs added by the end of 2020, claims a recently published report.

According to Reuters, U.S. manufacturers could benefit from a combination of factors that will help to increase the export of products such as heavy machinery or locomotive engines, as falling energy prices and a flexible American workforce give the country a competitive advantage over global rivals. The report, from the Boston Consulting Group, also highlighted that the increase in shale gas production will help to make average manufacturing costs in the U.S. lower than firms in Europe and Japan.

The report considers that by 2015, the cost of manufacturing in the U.S. will be 15 percent lower than in Germany or France, 8 percent lower than the United Kingdom and 21 percent cheaper than Japan. BCG estimates that the current trend toward natural gas will keep fuel prices low, with analysts forecasting that the U.S. will be able to take advantage of costs that are 50 to 70 percent below the going rate in Europe and Japan.

"The U.S. could capture 2 to 4 percent of exports from the four European countries and 3 to 7 percent from Japan by the end of the current decade," says Hal Sirkin, the author of the report and a senior partner at BCG. "This would translate into as much as $90 billion in additional U.S. exports per year."

This report fits in with the robust business strategy that is likely to be a part of the forthcoming election campaign. In his report, Sirkin feels that the firms involved in the production of industrial equipment, chemicals and transportation will have the most to gain from the competitive edge that the U.S. labor market can provide, with many firms already able to offer a flexible, and highly skilled workforce. American manufacturing strategy takes into account the periods of time that workers may not be operating at full capacity, a business practice that is not common across the pond.

"The competitive gap in some ways reflects the open U.S. labor market, where companies can quickly add or cut workers to meet changes in demand," said Sirkin. "In Europe and Japan, it's relatively hard to lay people off, and because of that you have employees for a long period of time that you may not be able to use. In the United States, there's much more flexibility."