Which will create opportunity for industrial Developers and Brokers
While free trade agreements and job displacement are hot topics in the Presidential campaign this year, the forgotten truth is the new growth in U.S. domestic manufacturing. Some call this trend on-shoring and others refer to it as re-shoring. According to a Boston Consulting Group survey, 31% of the companies that sell goods in the U.S. plan to increase manufacturing capacity in the U.S. 20% said they plan to add capacity in China for U.S. sales and 26% would do so in Mexico. Just two years ago, 30% said they would add capacity in China to serve the U.S. market and 26% said they would increase production in the U.S. What is triggering to this turn around?
- Shorter Domestic Supply Chains – The long supply chains associated with Asian produced goods eat up time and expose companies to multiple vulnerabilities ranging from inconsistent product quality to costly port slowdowns.
- Declining Wage Cost Differential – Wages in Asia have risen dramatically in recent years, diminishing any cost advantages.
- Smaller Domestic Inventories – When production is closer to the customer, companies can carry lower inventories which ties up less corporate capital.
- The Increased Use of Robotics in the Manufacturing Process
- Lower Energy Expenses – U.S. industrial electricity prices are now 30% to 50% lower than those in foreign countries due to our fracking capacity and lower natural gas prices.
- U.S. Domestic Tax Incentives
- U.S. Protection of Intellectual Property
This change in attitude regarding manufacturing in the U.S. is expected to lead to a net increase of 140,000 new domestic manufacturing jobs.
If we assume 750 sq. ft. is needed for each new job that would indicate demand for 105 million sq. ft. of new manufacturing space!