Rosy report predicts surge in factory jobs in U.S.

Andrew S. Ross, Chronicle Columnist

According to the Bureau of Labor Statistics, just 10 percent of American workers are employed in manufacturing, a situation that President Obama, in his State of the Union speech and on the campaign trail last week, promised to reverse.

His "blueprint for an economy to last," he told employees at an Intel plant in Arizona on Wednesday, will be "built on American manufacturing, with more good jobs and more products made in America."

Obama's optimism appears to be influenced by a report from the Boston Consulting Group ( sfg.ly/ysKf6F), which paints a rosy picture of a resurging U.S. manufacturing sector over the next few years. The White House was busy circulating the report earlier this month, around the same time its lead author was a panelist at an Obama-sponsored Insourcing American Jobs forum.

"Beat China" is the basic theme of the study, released in August. Increased labor costs in that country - up to 20 percent per year over the next five years - a rising yuan and the advantages of locating manufacturing closer to consumers will result in what the report calls a "manufacturing renaissance" at home.

Among the U.S. factors contributing to the renaissance are "an increasingly flexible workforce," "low-cost states" - it cites South Carolina, Alabama, Georgia, Tennessee and Kansas as examples - and "the strongest productivity growth in the industrial world."

While costs will continue to rise in China, "the U.S. is becoming a lower-cost country. Wages have declined or are rising only moderately."

Upside/downside: Not everyone was enthused by the report. America's world-beating productivity has done wonders for corporations' bottom lines, critics point out, but much less for workAir Maxs