Reduced Structural Costs Help Preserve High-end Manufacturing in the US

As the cost of manufacturing in the US declines, more companies are reconsidering moving production abroad, and some are returning production the US, according to a 2008 study by the National Association of Manufacturers (NAM). The NAM study reported that structural costs, which include expenses such as health care, taxes and environmental cleanup, have fallen in the US relative to this country's nine larges trading partners, which include countries such as Canada, the UK, Germany and Korea.

According to the study, the relationship between productivity and wage is becoming less favorable overseas. In countries such as Mexico and China, wage growth over the past decade has exceeded productivity by a wide margin.

Companies with high-precision products, such as Regal Ware in Kewaskum, are moving production back to the US because it is difficult to access the required engineering know-how to meet exact product specifications. High overseas shipping costs are also a factor.

--Tony Hozeny

More detailed information on this topic is available from a Nov. 13 Milwaukee Journal Sentinel article by Rick Barrett entitled "Overseas factories lose edge."