According to a recent Economic Policy Survey, economists advise that the federal government should increase spending, or at least allow it to remain unchanged, in 2013. If you combine this with news from a Boston Consulting Group (BCG) study, U.S. manufacturing and reshoring, the sluggish economy might finally get moving. Small urban manufacturers can provide the key to this growth.
A majority of respondents would prefer that both monetary and fiscal policies become more stimulative or remain unchanged in 2013. – NABE (see full download at end of article).
U.S. Exports are rising and are set to surge, according to this BCG report, and that fact shows that reshoring could help create up to 5 million jobs by 2020. Reshoring is the after-effect of offshoring, the common term that explains moving a company’s manufacturing or processes outside of the country. Many pundits argue that the costs of producing goods in another country can be more expensive than doing so with local labor and facilities. The report points to companies that have brought manufacturing back to the USA.
U.S. exports have risen by 30 percent since 2006, far outpacing growth in gross domestic product. “The signs pointing to continued export growth offer further evidence that the U.S. is poised for a manufacturing renaissance between 2015 and 2020,” said Harold L. Sirkin, one of the report’s authors, whose most recent book, GLOBALITY: Competing with Everyone from Everywhere for Everything, deals with globalization and emerging markets.
BCG projects that by around 2015, the U.S. will have an export cost advantage of 5 to 25 percent over Germany, Italy, France, the U.K., and Japan in a range of industries. Among the biggest drivers of this advantage will be the costs of labor, natural gas, and electricity. As a result, the U.S. could capture 2 to 4 percent of exports from the four European countries and 3 to 7 percent from Japan by the end of the current decade. This would translate into as much as $90 billion in additional U.S. exports per year, according to BCG’s analysis. – The Boston Consulting Group (BCG)
This data points to new opportunity for makers and inventors who are serious about building a manufacturing business. Although the report states that the “U.S. is becoming one of the lowest-cost producers of the developed world,” that doesn’t mean that niche, small urban manufacturers, have to be the lowest cost providers, however.
If the U.S. federal government is going to stimulate the economy, they need to do more than pay lip service to the small businesses that drive much of the job growth in this country and provide real incentives to kickstart the small urban manufacturing opportunity. In 2011, the Brookings Institution released a research paper on the federal role in supporting urban manufacturing that outlines key ways we can revive “Made in the USA” initiatives. It is an excellent report you can download here as well as case studies for Seattle, Los Angeles, New York, and Cleveland.
Smart cities are seeing value in energizing their urban core. For example, Huntington Bank in Columbus, Ohio, just announced they would $1 Million to invigorate inner city economic development. While this is a relatively small amount of money, if done right, it could really help get new companies, solopreneurs, micropreneurs started on the path to a successful maker business. “By targeting some of the barriers impeding urban entrepreneurs, we can bolster the number of successful small business starts and fertilize the growth of existing successful minority-owned ventures,” said CUL president and CEO Stephanie Hightower, noting that Columbus currently ranks 13th among 16 comparable cities in new business launches. “Inspired and empowered by Huntington’s leadership, we look forward to partnering with other leaders in the City, County and nonprofit community to create jobs and open the door for economic opportunity in the inner city.”
Read the National Association for Business Economics September 2012 survey here.
I’ve posted the entire press release from BCG on the TechBizTalk site here.
Updated: Excellent post from the Washington Post on Mr. Bernanke's efforts to create a more open and forceful Federal Reserve.
