According to several recent studies America is becoming increasingly cost competitive for manufacturing and services relative to our competitors overseas. Because of this, the reshoring to the U.S. of work once outsourced to the rest of the world is accelerating.
A recent study by the strategy consulting firm BCG found that the U.S. is the most cost competitive developed country for manufacturing. This is leading to more firm choosing to manufacture in the U.S. and could result in 5 million new manufacturing jobs being created in the U.S. by 2020.
This would be a very big increase in manufacturing employment, which currently is close to 12 million.
BCG credits America's energy cost advantages and particularly the low cost of U.S. natural gas a key reason behind America's new found competitiveness. We've posted in the past on energy and natural gas being an economic game changer for the U.S. Manufacturing is where low cost energy helps the most.
But it's not just manufacturing jobs that are moving back to the U.S. According to a recent article in CIO Magazine, services jobs are also moving back to the U.S.
In this case it's not just that U.S. costs are more competitive - there are other factors favoring the U.S. Key quote:
After more than a decade of offshore outsourcing, corporate leaders may be looking for more than just labor cost savings from their outsourcing engagements. And the new types of value they're seeking--innovation, communication skills, domain knowledge--are much more readily available in the U.S. than overseas ...
Given our current economic and employment situation, this is great news for the U.S. economy.