We’ve bemoaned (rightfully) the loss of blue collar manufacturing jobs from the US for the last several decades. And if all else were equal it would seem the distances between US and our remote suppliers would be even less an issue than they have been because of the increased efficiency of our supply chain technology. Turns out those assumptions are wrong.
In an analysis by PWC the initial reasons that made manufacturing in places like China so attractive are no longer dominant reasons. In fact the report shows that the cost of transportation alone between the US and China has shifted. In 2006 the costs equalled about 3.2% of revenues. Today that cost has risen to 8.1% of revenues. These numbers are for the steel industry rather than across the board, but remember that when the massive move to Chinese supply started, it was steel that lead the way.
Ancien Hippie 