What are the Challenges Facing US Manufacturing Today?

manufacturingAlthough manufacturing in the United States has seen an upswing in the last couple of years, challenges remain that could prevent a complete reversal of fortune in American manufacturing. The following will discuss some of the challenges still facing United States manufacturing today.

The Reduction of Skilled Workers and Suppliers: The number of skilled workers and suppliers has atrophied over the past two decades, forcing American businesses to shift production overseas to Asia. American manufacturers cite the inability to find enough workers skilled in operating or repairing sophisticated machinery. Moreover, American students perform poorly in international comparisons of math and science skills, and less American students are studying for degrees applicable to manufacturing, such as engineering majors. Therefore, U.S. manufacturing companies benefit from relocating overseas, as they can pay less money and receive better skilled labor, and this has a direct effect as to why there are fewer suppliers in America.

There are more Consumers in China and India: Because of the continued rapid growth of the population in these two countries, as well as others, most American manufacturing businesses still view its best opportunities for long term growth in Asia, Latin America and Africa. This is also pushed by the movement of more people in these nations moving up to the middle class. This means that emerging markets are likely to remain a higher investment priority among these nations than the slower-growing markets of North America and Europe.

Contentious and Fickle Political Climate in the United States: The top federal income tax rate for American corporations is thirty-five percent, which is the highest among major industrial countries. These perplexing tax rules give American firms an incentive to keep exorbitant amounts of cash invested overseas, rather than bring that money on domestic soil. Meanwhile, political gridlock in the U.S. leaves companies uncertain about future taxes, and with that political instability, U.S. manufacturing companies have little desire to change its perception.

The Flow of Jobs for American Workers is Going Both Ways: While bringing back American manufacturing back on domestic soil will no doubt create more jobs for Americans, as it stands currently, it is estimated that the same amount of jobs available for American workers are available overseas. American workers are no longer showing nearly the same amount of reluctance to move overseas as they have in the past. This is mostly due to wages overseas being usually much higher, and room and board is often paid for, because these corporations can afford this kind of payout when located overseas. Therefore, lobbying for U.S. manufacturing companies to come back to America to create jobs is no longer a viable argument, because research and evidence concludes that the same amount of American jobs are available overseas.

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