Global Labor Rate Comparisons: The Impact on Manufacturing Location Decisions and Reshoring

The centerpiece of location decision making is often the comparison of labor rates in various countries. While labor rates alone are not sufficient to make a fully informed decision, it is the starting point for many companies. This is particularly true if a company has been manufacturing in China, where labor costs have been rising over the past few years. Labor in China is no longer among the least expensive locations, taking its place in the middle of the global pack. Now, the difference between wages is shrinking and the premium that customers are willing to pay for a “Made in USA” label is growing. A recent study by the Reshoring Institute (www.ReshoringInstitute.org) indicates that Americans are willing to pay 15-20% more for products made in the USA.