According to a recent article from Fidelity Investment’s Dirk Hofschire, the US is back in the (manufacturing) game.

“…we have had greatly improved U.S. competitiveness in the manufacturing sector. This is an area where some of the low energy costs for manufacturers is helping. The real story is that, over the past decade we’ve [US] had limited wage gains, really strong gains in worker productivity, and the dollar has declined in value. All of these things together have led to a large decline in unit labor costs here in the U.S. As a result, there’s a big increase in our competitiveness in this sector, relative to other countries around the world. We’re starting to see evidence of companies making more manufacturing investments here in the United States, and even some examples of companies bringing production back onshore.”

The graph below may help explain why Canada has become uncompetitive and why , for instance, Caterpillar chose to close its plant in Ontario. The chart shows manufacturing labor costs change in the last decade adjusted by the change in the real effective exchange rates, according to the OECD, Bank for International Settlements, Haver Analytics, FAM (AART) through 12/31/11.

Original article here.

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