Made in America: Manufacturing’s Multiplier Effect on the U.S. Economy
"Made in America" manufacturing is booming and with it comes more than just national pride -- billions of dollars in manufacturing are returning to American shores.
It's a story that is being written more and more frequently these days, as companies from Apple to Ford Motor to General Electric, are bringing the production process back to the United States.
This week's cover story in Barron's magazine argues that jobs are returning to American shores, fueled by a home-grown advantage found in stable and affordable natural gas which is creating a resurgence of the U.S. manufacturing sector. Additionally, the article points out the multiplier effect that manufacturing has on the rest of the economy; for every $1 spent on U.S. manufacturing, $1.48 is added to the greater economy.
That's an impressive value.
The benefit to the U.S. economy can't be understated.
Cheap energy not only reduces our trade deficit and our addiction to Middle East oil, it also makes our factories more competitive globally -- a boon for a country that had gone from exporting American goods to exporting American jobs.
Yet, there's a challenge to this new promise.
While the U.S. is reaping the benefits of some of the cheapest natural gas in the world (currently $3.55 per million British thermal units, compared to $12 in Europe and $16 in Japan), excessive exports could ship our gas advantage and our jobs back overseas.
A recent report released by the Department of Energy suggests that excessive exports of natural gas will create profits immediately, but it fails to recognize the tremendous economic potential of using natural gas here to satisfy the incredible demand and support investment in the U.S.
We can't let our advantage go to waste, not when the promise of new jobs is so great.
North America already produces more natural gas than any other continent and the natural abundance coupled with low cost is a potent combination that is putting American manufacturing back on track.
From steel plants, to manufacturing operations reinvesting in capital improvements, to producers of gas-powered electricity, the growth of these and related industries could define a stronger more energy-independent American landscape – if we don't let this opportunity pass us by.