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High-Tech Manufacturing Drawn To Asia By More Than Low Wages

Low-wage competition is no longer the only draw Asia offers to manufacturing corporations, according to The Washington Post’s Peter Whoriskey.

Between 2000 and 2010, America’s high-tech manufacturing sector shed 687,000 jobs – a 28% reduction. The President’s Council of Advisors on Science and Technology recently warned that this reduction could spell trouble for America’s current place on the world stage.

“We cannot remain the world’s engine of innovation without manufacturing activity.”

According to Whoriskey, Asian countries have made formidable leaps to attract and develop high-skill engineering jobs. China and nine other Asian countries are matching American spending on research and development. Further, the number of engineering doctorates in China far exceeds those in the United States.

However, Whoriskey adds, the labor automation available in the American market will become a factor in bringing manufacturers back to the U.S. as wages in China are rapidly rising, reducing the cost differential that was once available in that market. A recent report published by the Boston Consulting Group noted that the cost gap between the U.S. and China to produce many goods consumed in North America will be almost nil.

However, given that the comparison is between paying Chinese wages versus running American machines, this manufacturing return won’t necessarily lead to a return to the pre-2000 level of American manufacturing jobs.