This article found in National Post, May 2011, written by Christine Dobby states that Canada could reap the rewards from a return to “made-in-America manufacturing”. Harold Sirkin, who is based in Chicago and a senior partner at Boston Consulting Group, predicts a renaissance in industrial manufacturing in the United States by 2015 as outsourcing production to China becomes less attractive to U.S. companies due to rising wages and the surging yuan.

Canada stands to benefit for there will be a rising demand for raw materials from us, their neighbour to the north. As well, if there is an increase in production of cars and electronics, Canada can see a boost in manufacturing.

The proximity lends to a natural demand/supply relationship. Mr. Sirkin says, “There will be a bunch of Canadian plants that will naturally succeed because people will want to source more closely to where they are producing. Canada has a great workforce and great work ethics and if the economics are right, there will be just natural demand for job growth because of the demand from the U.S.”

One of the key determinants is the rising Chinese wage — wages are rising at about 17% annually as workers in that country grow less willing to relocate for low-wage jobs. Meanwhile, in certain states in the U.S. (Texas, South Carolina, and Alabama) there are more flexible labour rules and government initiatives that make it more attractive.

Another key determinant is the price of oil — to ship something for 12-13 days can be quite costly and unappealing. As well, companies are concerned about their carbon footprint.

It is expected by 2015 the difference between wages in the U.S. and in China are to be 10-15% cheaper in China than in the U.S. Then you must consider shipping costs and carbon footprint.

It is likely that for cheaper products like shoes and clothes, they will continue to be made in China however companies in the U.S. are likely to ramp up U.S. production of goods like cars, consumer electronics and appliances.

The one major factor to keep in mind for Canadians, is that we need to pace and monitor how much resources we are shipping to the U.S. At what point are we environmentally affecting our country. We need to have strategies in place for renewal and regeneration of our resources.

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