U.S. manufacturing to benefit from increased productivity

August 13, 2012

Reversing years of outsourcing and job losses to China may be difficult for the U.S. manufacturing sector, but a revamped business strategy for American firms and a reversal of several key trends have accelerated a resurgence within the industry.

According to The Epoch Times, the use of more advanced equipment has also helped to fuel growth for American firms, as companies are benefiting from competent workers that understand how to operate complicated machinery. Though the wages for these employees may be higher than their foreign counterparts, firms have figured out that this move is worth the upfront costs.

American manufacturing wages average $34 an hour, a staggering 21 times more than the average for a Chinese employee, but the value added by these U.S. professionals is also much higher.

According to the news outlet, each U.S. worker adds $145,000 in value, much higher than German, French or Japanese employees, and more than 10 times that of Chinese professionals, as they only contribute $13,700.

While U.S. manufacturing workers are likely more competent than their foreign counterparts, the combination of this notion and the advanced machinery they use is likely what brings value to the American sector.

According to the Times, The U.S. worker is on top with $73 in value-added per hour worked, compared to only only $7.19 of value per hour for the typical Chinese manufacturing employee. Japanese, German, and French workers contribute up to $63, and this is often on the high side and not the average.

A fear of being laid off has also provided the overall American workforce with a greater sense of urgency and incentive to increase their productivity level, further contributing to growth and leading to an uptick in the amount of hours these individuals are willing to work.

Hal Sirkin, the managing director for the Boston Consulting Group, wrote an article for the Huffington Post that outlined how the resurgence in the sector will provide $100 billion of added economic growth and will generate two to three million jobs in the next decade.

According to the article, this number may even be lower due to the rising wages that Chinese workers are asking for.

"When you factor in the risks and realities of doing business in China – weak intellectual property protection and rule of law, long lead times, and lack of proximity to key customers, among others – companies are willing to bring manufacturing back when the cost difference is in the single digits," noted the financial expert.