The People of America's Oil and Natural Gas Indusry

Technology, U.S. Energy Resurgence Driving Manufacturing, Job Growth

Mary Leshper

Mary Schaper
Posted June 5, 2014

Why Manufacturing is Heading Back to the U.S.

The Wall Street Journal (ROBERT PROFUSEK): Since the 1970s, multinational companies regularly relocated manufacturing outside the U.S., chasing what GE’s Jeff Immelt coined “labor arbitrage,” and the conventional wisdom was that U.S. manufacturing was heading to an inexorable death. The conventional wisdom has, however, proven untrue, as so often is the case.

Some of the reasons for the rebirth of manufacturing in the U.S. were the inevitable consequences of the rapid rise in industrialization in emerging market countries–think of the pollution and daily rolling brownouts in India, labor unrest and increased wage and work rule demands in China and unpredictable legal systems in many emerging market countries. But the fundamental factor driving manufacturing back to the U.S. is technology–computers and robots have further eroded the labor arbitrage, and the U.S. is the undeniable global leader in technology and innovation. At the same time, the U.S. is in the midst of an energy boom, itself technology-enabled, producing an enormous cost and reliability advantages. While this particular advantage can be expected to diminish over time, it is real and the catch-up time is likely to be long, as evidenced by China’s inability to date to exploit its own shale gas reserves cost-effectively.

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Mary Schaper is a Digital Communications Manager for the American Petroleum Institute. She previously worked on Capitol Hill for the Senate Energy and Natural Resources Committee as Digital Director and for Senator Lisa Murkowski. Before coming to D.C., she spearheaded digital strategy for Murkowski's successful Senate write-in campaign in 2010. Schaper enjoys traveling and taking in the local culture alongside her husband, their son and loyal springer spaniel.