Dollars' rise against the euro sets manufacturing pace

Never have so many sat on so much cash.

Looking at the figures – for instance, Apple Computer with $76 billion has more cash reserves than the U.S. Treasury's measly $74 billion – one wonders why those who occupy swivel chairs in corporate suites don't have misaligned spines from sitting on such fat wallets.

That's starting to change. Three wise men from Boston predict that it will only be about 10 percent cheaper to make goods in China – where all those iMacs, MacBookPros and iPhones are made - within the span of the next Presidential administration – that is, by fiscal 2015.

Harold Sirkin, Michael Zinser and Douglas Hohner of the Boston Consulting Group, have concluded that outsourcing manufacturing to China is not as cheap as it used to be and that The United States is poised to bring back jobs from China. The three consultants first reached this conclusion in a study, “Made in America Again: Why Manufacturing Will Return to the U.S.”

A combination of higher shipping costs, a weaker dollar and the availability of more money are the factors to which they point.

“We have to recognize one thing,” Mr. said in a recent interview. “The average Chinese worker is about a quarter as productive as the average U.S. worker.”

“It’ll be a major impact. Our projections are, when you take the manufacturing jobs and then the service jobs that get created alongside those, that we will add two to three million jobs to the U.S. workforce.”

The study predicts furthermore that wage and benefit increases at 15 to 20 percent per year will reduce the Chinese advantage of cheaper labor from 55 percent to 39 percent by 2015.

Read the study at this URL: http://www.bcg.com/expertise_impact/Capabilities/Operations/Manufacturing/PublicationDetails.aspx?id=tcm:12-84591