U.S. manufacturing may benefit from losses in Europe

August 10, 2012

While many industries may be negatively affected by the drop in production of the economies of Europe, there is one sector that stands to benefit from the fiscal crisis that is tearing through the euro zone.

According to Forbes, the inhospitable business environment in the U.S. was credited with drawing jobs and investment away from the country's manufacturing sector, but the days of this trend of outsourcing are likely over.

Companies from all over the world are looking to build their factories closer to the biggest market for their products, due to rising fuel costs and increased wages worldwide, and this adoption of a different business strategy is something that American manufacturers will benefit from.

According to the news outlet, the demise of Europe is likely to expedite this transition of jobs and production back to the U.S., as major corporations that are based on the continent are already looking at sites in North America.

Companies like BMW and Mercedes, which have both traditionally based the majority of their operations in Europe, are ramping up their investment in manufacturing facilities. According to Reuters, they aren't the only automotive firms to do this, as Toyota is looking to open new production sites in the U.S. in the near future.

"With where the yen is today, I think it’s only a matter of time" before Toyota moves more production to North America, particularly to the United States, to have assembly nearer to the U.S. market, one executive told the news outlet.

The increased productivity of U.S. manufacturers is also something that is helping to increase the number of jobs and work that is coming back to American firms from abroad. A recent report from the government noted that an uptick in the rate at which work is done only gives foreign businesses more confidence.

"Nonfarm business sector labor productivity increased at a 1.6 percent annual rate during the second quarter of 2012," said the U.S. Bureau of Labor Statistics. "The increase in productivity reflects increases of 2.0 percent in output and 0.4 percent in hours worked."

And with the European crisis likely to persist until Mario Draghi and his ECB peers make a move to enact stimulus measures, the future is certainly bright for U.S. manufacturing firms.