The analyses by Charles Fishman and James Fallows seem to be predicated on the odd assumption that the only two places where manufacturing occurs are China and the U.S. While it’s true that rising labor costs are making Chinese manufacturing cost-prohibitive, fortunately for U.S. businesses and consumers, the authors’ assumption is wrong. American companies are opening factories rapidly in Mexico, a nation of 114 million with relatively low labor costs, directly adjacent to the U.S. The continent of Africa, with more than 1 billion mostly poor and unemployed people, will become a practically unlimited source of low-cost manufacturing in the coming decades, as Chinese companies seem to have realized already. America’s time as a world-beater in manufacturing is long since past. The sooner academics, politicians, and, yes, journalists admit the truth, the better.
Charles Fishman and James Fallows rightly point out the economic advantage of close proximity for design and manufacturing teams. It is also true that rising wages in China decrease that country’s competitive advantage. These factors tend to encourage our companies to manufacture in the U.S. However, if China is allowed to maintain a huge trade surplus with the U.S. by relentlessly manipulating our currency exchange rate, the U.S. manufacturing renaissance will be stillborn. In 2011, our trade deficit with China was $295 billion, which is the equivalent of about 7 million U.S. manufacturing jobs. China has caught up technologically. Its design and manufacturing teams are also in close proximity, producing Chinese goods that, with an artificially cheap currency, will continue to drive American companies out of business.