China's rising labor costs create hope for Illinois manufacturers

Aug 14, 2012

In 2011, Illinois saw a net gain in manufacturing jobs. The Illinois Manufacturers' Association says it was the first time that has happened since the late 1990's. The association says there are several contributing factors, including the growing cost of producing products in China.

Mark Denzler is the association's vice president.

"The wages in China have been rising for a number of years. They're certainly not on par with the United States yet, but every time they go up,  it makes Illinois and the United States more competitive" Denzler said.

Denzler says other factors could get in the way of the so-called "re-shoring" of U.S. manufacturing jobs. He says companies could be looking at places like North Africa for cheap labor.

But NIU economist Carl Campbell questions how much of that is going on. He says it might be hard for U.S. companies to establish themselves in other places like they did in China. 

"It might not be as easy in other countries where the U.S. has less experience working with companies there" Campbell said.

Back in the Spring, a leading management consulting firm conducted a survey. It showed that 37 percent of manufacturers with sales of more than $1 billion and almost half of those with more than $10 billion “plan to or are actively considering bringing back production from China to the U.S. 

But Campbell and other economists say there's no clear evidence of a trend developing just yet.  However, they do say the conditions are there for some relief when it comes to reversing the outsourcing trend.