Are southern US states now the “least expensive production sites in the industrialized world”?

An article in Bloombergbusinessweek (September 4, 2014) titled “The U.S. South Rises as a Manufacturing Hub” describes an article by BCG’s Harold Sirkin claiming that South Carolina, Alabama and Tennessee represent the “least expensive production sites in the industrialized world”, with wages at around $15/hour and over 410 new projects (the highest in 20 years). The  rising Chinese wages (from 82 cents an hour in 2001 to $4.93 per hour now), rising gas prices from $20 a barrel to $100 a barrel in the same period, and strong state incentives to attract production.  Should relocation decisions for local manufacturing be driven by current economics or a longer term strategy to capitalize on local production and short lead times ? Given expanding markets in Asia, should production similarly be distributed across the world to balance economies of scale and response flexibility ? What productivity expectations should be expected to maintain global competitiveness for US manufacturing and how should local educational organizations foster skill development among factory workers to enable such long term productivity gains ?

About aviyer2010

Professor
This entry was posted in Collaboration, competitiveness, Global Contexts, Operations Management, productivity, Supply Chain Issues. Bookmark the permalink.

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