Rising Costs in China Combined With Higher U.S. Productivity Will Trigger a “Renaissance” in U.S. Manufacturing

The Wall Street Journal reports reports today about a Boston Consulting Group study that says rising wages in China combined with higher material and shipping costs are fast eroding the economic giant’s cost advantage. With many states adding tax incentives to encourage local production, as early as 2015 it will make more sense for U.S. companies in such industries as electronics to add production in the U.S. rather than China, , according to the report. Although other regions such as Vietnam and India have lower wages, they do not have the infrastructure in place to build strong export machines. The BCG report consequently predicts there will be a “manufacturing renaissance” in the U.S. That’s good news for regions like Washinton state that have maintained a strong manufacturing base. It also raises questions whether strategic tax incentives by the state could play a key role in strengthening our manufacturing sector.