U.S. manufacturing to be helped by renaissance of advanced sector

May 2, 2012

Though the past few decades have seen many American companies shift their operations overseas, due to cheap labor and relatively low fuel costs, this trend is beginning to shift back to the U.S.

The Atlantic reported that a large number of advanced manufacturing operations are emerging in the U.S., part of what is helping to stimulate the American renaissance in the sector and bringing back work from countries like China.

According to the news outlet, advanced manufacturing often refers to next-generation techniques that rely on the use of sophisticated materials and production technologies, such as robotics. This has led to a number of new products, and the American manufacturers have adjusted their business strategy to include this potential output.

Labor usually comprises only a small part of the costs associated with this type of manufacturing, which helps to give American companies a boost. The lack of an advantage for cheap workers has shifted the production advantage back to the U.S., where employees are likely to possess the skills required for a technical operation.

According to The Atlantic, the rising wages for Chinese workers have also shifted the base of operations back to the U.S. for many companies, as the economic rationale for moving work overseas is diminishing. This, coupled with a rapidly changing world marketplace demanding goods be produced closer to end markets, has given American manufacturing an advantage in the advanced sector.

Government initiatives, according to the news source, can help to expedite this transition back to the U.S. and bolster the long-term viability of the American sector. Government spending on basic and applied research could help to stimulate R&D projects for companies, along with providing them with workers who can adapt to the changing world of manufacturing.

According to an article in the Huffington Post, the U.S. government has created a National Network for Manufacturing Innovation, which recently held its first conference to determine how the program will run and how to stimulate progress in the sector.

This effort could help to fill in the gaps left by the private sector in terms of future investments, as companies are unlikely to dump money into projects that have long-term returns in the current economy, according to the news source.