For several years, a "Made in America" renaissance has encouraged U.S. workers, producers and transportation companies. As the country slowly lifts itself out of an economic recession, a new study from the Boston Consulting Group (BCG) shows growing domestic production could help the U.S. grow in the coming years and boost export numbers. This trend could result in more business for the transportation industry, as manufactured items will need to be distributed to American retailers, consumers and warehouses, as well as shipping hubs so they can be carried overseas. This increases the need for route planning software as runs become more complex and business rises.
Cost benefits of American manufacturing
The report analyzed trends in labor, energy and logistics expenses and determined the U.S. has a growing advantage when it comes to other countries in regard to production costs. America is expected to be a more attractive place for businesses to engage in manufacturing activities than many major European countries or Japan, according to the data. The country could also begin to see more nearshoring from companies that previously sent manufacturing facilities to low-cost countries in Asia in recent years, thanks to growing cost advantages.
Labor will be a key factor in this shift - the report estimates American labor costs will be 15 percent to 30 percent lower than those seen in Western Europe and Japan by 2015. Low energy prices will also play a role, as natural gas and electricity expenses are anticipated to be as much as 70 percent lower in the U.S. than in Europe or Japan by this time.
"Over the past 40 years, factory jobs of all kinds have migrated from high-cost to low-cost countries," said Harold Sirkin, a BCG senior partner and a coauthor of the report. "Now, as the economics of global manufacturing changes, the pendulum is finally starting to swing back. In the years ahead, it could be America's turn to be on the receiving end of production shifts, as more companies use the U.S. as a low-cost export platform."
More opportunities for the transportation industry
As American manufacturing continues to grow, thanks to low energy and labor costs, more production will call for transportation companies to deliver supplies, raw materials and finished products across the country.
Firms will need to deliver items to domestic purchasers, but also to shipping hubs, as exports are also slated to rise. With the U.S. projected to gain up to $12 billion in chemical and machinery exports, and as much as $9 billion in transportation exports, fleet managers must be certain their drivers are on the most direct route when making scheduled pickups and deliveries to handle to upswing in business. By relying on route optimization software, businesses can rest assured all stops will be made in a timely manner and their reputations for on-schedule service will not be tarnished.