Open Mobile Navigation
Visit 415 Access 330.492.0094

U.S. manufacturing gaining on China


Decades-old perceptions about which countries offer the lowest cost of manufacturing should be revisited considering changes in the global economy, according to new research by The Boston Consulting Group.

American factory

A number of countries that were leaders in manufacturing competitiveness 10 years ago have fallen to the back of the pack as increased energy costs, wage increases, unfavorable currency swings and lagging productivity have shifted the global order.

The costs of manufacturing in Mexico are now lower than China, the study found, and the United States has gained substantially in its ability to compete with China as China has dealt with rising wages and higher energy costs.

In 2004, manufacturing in China cost 14 percent less than the United States. A decade later, China’s advantage has fallen to less than 5 percent. If trends continue, Boston Consulting said, manufacturing in the United States will be cheaper than in China by 2018.

A major part of the resurgence in competitiveness of the U.S. market is the boom in U.S. shale production, which has reduced the price of natural gas and slowed the cost of electricity, the researchers found.

In addition, labor costs in China have skyrocketed by 187 percent since 2004, compared to 27 percent in the United States. The value of China’s currency has also risen more than 30 percent against the U.S. dollar over the past decade, making goods produced in China more expensive to foreign markets.

While the United States and Mexico recorded the biggest gains in competitiveness among the world’s top 25 exporting nations, Brazil – traditionally one of the lowest-cost countries for manufacturing production – has become one of the highest-cost countries because Brazilian factories did not improve efficiency enough to offset rising energy and labor costs.

Australia has higher manufacturing production costs than any other country, followed by a number of European countries including Switzerland, France, Italy, Belgium and Germany. Russia and Canada have also showed declines in cost competitiveness over the past decade.

While the United States and Mexico were the only two countries that had improved their competitive position in the past 10 years, several countries have held steady, including the United Kingdom, Netherlands, India and Indonesia.

The following manufacturing-cost index – based on the direct cost of manufacturing, including labor costs, energy costs, productivity growth and currency exchange rates – shows the level of competitiveness in the 25 major exporting countries.

Hourly wages of manufacturing workers in the 25 countries averaged $17.64, but the rates ranged from a high of $35.83 in Switzerland to a low of 29 cents an hour in Indonesia.

The United States leads the world in value of output per manufacturing worker, and Brazil is the least productive.

Russia has the lowest electricity and natural gas costs, while Italy and Switzerland have the highest, respectively.

In the index, Indonesia has the least expensive manufacturing costs overall, followed by India, Mexico and Thailand.

Country Index
1. Indonesia 83
2. India 87
3. Mexico 91
4. Thailand 91
5. China 96
6. Taiwan 97
7. Russia 99
8. United States 100
9. Poland 101
10. South Korea 102
11. Czech Republic 107
12. United Kingdom 109
13. Spain 109
14. Japan 111
15. Netherlands 111
16. Austria 111
17. Canada 115
18. Sweden 116
19. Germany 121
20. Italy 123
21. Brazil 123
22. Belgium 123
23. France 124
24. Switzerlad 125
25. Australia 130

Of the 10 largest export economies, China remains in the top position, followed by the United States, South Korea and the United Kingdom.

Paycheck Protection Program Loan Forgiveness Applications

If your business received a PPP loan, you may be eligible to have that loan forgiven. Our team can help you ensure that your loan forgiveness application is filed correctly and timely. Complete our five-question form, and we can provide a quote for your application by the next business day.

Request a Quote
© 2023 All rights reserved.