U.S. manufacturing strong despite surging dollar

U.S. manufacturing is cheaper despite a strong dollar.

A newly published report shows that U.S. manufacturers are remaining competitive despite a strong U.S. dollar.

According to the Boston Consulting Group (BCG), a drop in the euro and rise in the dollar has brought costs in the two regions closer, but that European manufacturing is still about 10 percent higher, on average, than U.S. manufacturers.

"The U.S. remains one of the lowest-cost locations for manufacturing in the developed world," said Harold L. Sirkin, a BCG senior partner, in the report.

Last year, BCG created the Global Manufacturing Cost-Competitiveness Index last year to help gauge manufacturing costs in the 25 largest export economies. The strong U.S. dollar helped countries like Germany, France, Japan, Australia and Brazil get closer to the U.S. in costs, but each still came in above the U.S. in the latest Index. 

BCG's Index rates the other 24 countries all relative to the U.S., to which it assigns a rating of 100. A score above 100 is more expensive whereas a rating below 100 is less expensive. Only seven were rated as being cheaper than the U.S. with two others, the Czech Republic and Poland, were rated as a relative tie to the U.S.

The report says that energy reserves have helped the U.S. stem the tide of the dollar's growth.

"The U.S. continues to reap the benefits from low-cost energy, with massive North American reserves providing long-term energy-cost stability, regardless of global price changes," the report states. 

The report offers three suggestions to U.S. manufacturers to help stay competitive in the long term: geographic supply-chain diversification, long-term planning for purchasing, an increased focus on productivity gains and a greater use of automation to help mitigate potential wage increases.