Manufacturing Making A Comeback In The US

Nov 11, 2013

After decades of losing jobs and business to China, manufacturing is starting to look up again in the United States, according to the latest data.

The high cost of shipping, higher wages abroad and an abundance of domestic natural gas are all contributing to a manufacturing upswing in the U.S.

Companies like Dow Chemical, Shell Chevron, Exxon and Bayer are expanding current U.S. plants and building new ones.

Airbus will make planes in Alabama and Samsung is building a semiconductor plant in Texas.


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From NPR and WBUR Boston, I'm Jeremy Hobson. It's HERE AND NOW.

For decades, the U.S. has been losing manufacturing jobs to places like China, where the cost of doing business is lower. But now, that trend is starting to change. According to a report by the Boston Consulting Group, more than half of large U.S. manufacturing executives are planning to bring production back to the U.S. One of the states that is benefiting is Texas, where we find Andrew Schneider, who is a business reporter for HERE AND NOW contributing station KUHF in Houston. Andrew, thanks for joining us.

ANDREW SCHNEIDER, BYLINE: Thanks for having me, Jeremy.

HOBSON: Well, when we say that one of the states that's benefiting from this is Texas, what does that mean on the ground?

SCHNEIDER: Well, we've got quite a few companies here that have either decided to shift production from China to Texas, or decided to build here instead of building new factories in China. We've got a company right here in Houston called Farouk Systems. They manufacture things like hair irons and dryers, and they recently relocated quite a few jobs from China as well as South Korea to a factory right here in town. You've also got third party companies like Toshiba from Japan. Toshiba industrial operation has also taken on quite a bit of work that otherwise might have gone to China.

HOBSON: So what are the factors here because traditionally, of course, China has been the place that American manufacturers and others want to go to make their products?

SCHNEIDER: Well, there are a few different things. One of which is on the Chinese end, of course, is that over several recent years, you've seen double-digit increases in the cost of labor that, you know, it's still a fraction of what labor costs are here. But it's grown enough to the point where it is less of a draw. You've also got the fact that the price of oil has been quite high in recent years. That's increased the cost of shipping finished goods across the Pacific.

And on the other hand, you know, the fact that we've had this revolution in natural gas in the United States means that the cost of natural gas here, as a way of running factories, makes it a good deal less expensive to manufacture here. And, you know, taking all those factors into account, it does tend to reduce the benefit of shipping the work overseas. And if the choice is between shipping the work overseas and doing it here, and there's no real cost savings, then more and more companies are going to make the decision to keep the jobs at home.

HOBSON: Yeah. I see that some companies are even saying that it hurts the end product for the designer to be in a different place than the manufacturer. So that may be a factor here as well. What about Texas? Why Texas in particular?

SCHNEIDER: Well, one of the reasons is that Texas is a right-to-work state. That means businesses are not required to have a unionized workforce. You know, for better or for worse, that is a concern for a lot of companies. And if they are concerned about their leverage with regards to their workforce and being able to negotiate things like wages and benefits, that's going to be a concern as to where they ultimately set up shop.

Another factor, again, is simply the question of energy. You know, if you're closer to the source of what you need in order to get your factory to work, that's one less logistical concern that you have. You don't have to worry about pumping your gas in from another state. You've also got one of the most active port systems here in the country based in and around the Port of Houston. And that makes a tremendous bit of difference once you're trying to get your finished goods out to ship them out overseas.

HOBSON: Andrew Schneider is a business reporter for KUHF in Houston. That's a HERE AND NOW contributing station. Andrew, thanks so much.

SCHNEIDER: Thanks for having me.

HOBSON: You're listening to HERE AND NOW. Transcript provided by NPR, Copyright NPR.