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3 reasons why US is recapturing manufacturing from China

3 reasons why US is recapturing manufacturing from China

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Conventional wisdom says China is losing its outsource manufacturing edge due to rising worker wages. But technology advances in North America are dramatically lowering domestic manufacturing costs.

In recent times, there have been a number of studies and opinions released speculating that manufacturing is shifting away from China and back to North American shores simply because Chinese worker wages are rising, reducing the competitiveness of outsourced manufacturing in that locale.

However, Vivek Wadhwa takes a different view, noting that the US is gaining the upper ground with manufacturing because of technology advances that make manufacturing much smarter and far cheaper:

Robotics: "The factory assembly that China is currently performing is child's play compared to the next generation of robots -- which will soon become cheaper than human labor." Many Chinese plants are also installing robots to remain competitive with US-based plants. But shipping costs may become a differentiator -- the closer the process is to markets, the cheaper.

Artificial intelligence: "AI technologies will find their way into manufacturing and make it 'personal': that we will be able to design our own products at home with the aid of AI design assistants." Wadhaw says we are entering a "creator economy" in which "mass production is replaced by personalized production, with people customizing designs they download from the Internet or develop themselves."

3D printing: As the "creator economy" emerges, the means of production moves closer to home, if not into the home itself, through cheap, widely available 3D printers.  Manufacturing plants also are beginning to take advantage of 3D printing on a larger scale.

Wadhwa also cites additional technologies on the horizon that are changing the face of manufacturing, including nanotechnology that makes it possible "to create products that are stronger, lighter, more energy-efficient, and more durable than existing manufactured goods." In addition, a new field -- "molecular manufacturing -- will take this one step further and make it possible to program molecules inexpensively, with atomic precision." Molecules to manufacturing will be what bits currently are to computing.

(Photo: US Navy via Wikimedia.)

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Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure