What gives American factories their competitive edge: They’re easy to close

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By Tim Fernholz

Yesterday’s pleasant surprise: The US economy grew much faster than we thought in the previous quarter: 2.5% on the year, thanks to robust exports.

Another pleasant surprise: That might continue. America’s great manufacturing renaissance continues to attract converts. Companies including Toyota, Honda, Siemens and Rolls Royce have all shifted production to the US in recent years. Boston Consulting Group, which advises companies on their supply chains, recently made an extended case that the United States is like the China of wealthy countries (awesome analogy!) because of how cheap it is to make stuff there.

Here’s BCG’s chart. What it shows is that labor and energy costs are a lot lower in the US than in Europe and Japan, and are no higher, combined, than in China. Overall, in 2015, manufacturing in the US will cost only about 5% more than in China.

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Even if you doubt the bit about China, the notion that the US will comfortably beat out Europe and Japan makes sense. It has a more flexible labor market, and cheaper energy and plastics thanks to the oil fracking boom. The US also has the transit efficiencies that come with location. It costs more than twice as much to ship a container to Rotterdam from Yokohama as from New York City. And while shipping from the US west coast to Asia is comparably priced to shipping from Europe, it’s faster—and almost as cheap as shipping from Japan to China!

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http://qz.com/119674/what-gives-american-factories-their-competitive-edge-theyre-easy-to-close/

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1. I.e. Employees Are Our Most Valuable Asset because they're disposable