Here’s Why U.S. Exports are Set to Surge

According to new research by the Boston Consulting Group, U.S. manufactured exports are set to surge. As manufacturers shift their production to take advantage of lower costing labor, natural gas, and electricity in the United States, 2.5 to 5 million jobs will be created by the end of the decade.

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Boston Consulting Group’s analysis, “Made in America, Again,” predicts that by approximately 2015, the United States will have a 5 to 25 percent export cost advantage over Germany, Italy, France, the United Kingdom, and Japan in an array of industries. Currently natural gas prices in this country are 50 to 70 percent cheaper than in Europe or Japan, and labor costs are predicted to be 20 to 45 percent cheaper than in other developed economies.

“Now, however, a combination of economic forces is fast eroding China’s cost advantage as an export platform for the North American market,” BCG wrote in their analysis. “Meanwhile, the U.S., with an increasingly flexible workforce and a resilient corporate sector, is becoming more attractive as a place to manufacture many goods consumed on this continent.”

Forecasts by the BCG place annual gains from increased exports at $130 billion dollars, with the biggest gains in machinery, transportation equipment, electrical equipment and appliances, and chemicals.

Although the reshoring trend is only in its infancy, several large manufacturers have announced plans to use the U.S. as a base for exports to other markets. Toyota (NYSE:TM) plans to assemble its Camry sedans in Kentucky and Sienna minivans in Indiana, Siemens (NYSE:SI) is building gas turbines for export to the Middle East, and Rolls-Royce began producing aircraft engine parts in Virginia.

So far, U.S. exports have risen by 30 percent since 2006.

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