Over the past several years we’ve heard a great deal of rhetoric from politicians and business leaders alike regarding manufacturing jobs. Main arguments surround cost and availability of resources—business leaders stating US manufacturing is too costly with rising labor rates as their leading concern, while politicians clamor for more blue-collar opportunities for their constituents. Decades of labor and trade regulation have all but driven manufacturing at scale off of American shores, while Asia’s burgeoning finished goods export business continues to grow.
But It’s Not Just Lower Labor Costs
In 2016, China’s purchase of manufacturing automation equipment nearly equaled that of North and South America and Europe, positioning their country to be a leading exporter of finished goods, supplying roughly 20 percent of the world’s manufactured goods. With China’s significant investment in automation on top of already low labor rates, how can the U.S. compete?
Fuel Standards To The Rescue
An upcoming regulation by the International Maritime Organization (IMO) effective in January 2020 mandates a reduction in fuel emissions for ships. With the rise in fuel costs as quality increases, so will the cost of transport of goods across seas, leveling the playing field between imported and domestically-manufactured goods.
Will businesses suddenly switch to U.S. manufacturers as import fees increase? Some might, but the reality is the matter of origination has just as much to do with process as it does price. Flipping back to the investment China made in automation, small to mid-sized manufacturers in the U.S. have been slow to adopt automation due to the high up-front investment. While investing in new equipment is costly, consider it a cost of remaining competitive, or gaining an edge on your foreign counterparts.
Shifts In The Labor Force
Of course, it can be argued that factory automation eliminates manufacturing jobs, however few SMB’s have the resources to make a significant transition to most-or-complete automation out of the gate, but will likely see an incremental shift, which gives factory workers time to acclimate, retrain for new roles as operators or moving over to logistics as volume increases.
At ENGS, we offer industrial equipment financing tooled for your industry and business. If you’re curious about exploring the next step in manufacturing equipment and automation in your business, contact your ENGS representative today.