A customer recently told me they want to proceed with a 50,000 sf factory addition. They considered trying to outsource the manufacturing to China, even took a few trips over there. They concluded, however, that they benefited from the close feedback loop of tweaking the design and making changes during manufacturing (the same thing they do during building construction). They keep changing things on the fly, but end up with a great product.

Turns out The Economist article Moving Back to America indicates that the decision  to build here makes sense on a few other levels as well. The labor costs in China have risen 65% from 2005 to 2010. America’s labor costs…not so much.

“Sometime around 2015, manufacturers will be indifferent between locating in America or China for production for consumption in America,” says Hal Sirkin of Boston Consulting Group. Since factories take time to plan and build, many manufacturers have re-directed their efforts to America. Caterpillar starts a plant in Texas soon. Wham-O, the manufacturer of Frisbees and Hula Hoops moved half its production from China and Mexico back to America.

Of course, for goods to be sold in Asia, plants there will continue to make the most sense. As the world settles into globalization, companies learn that simply lowering labor costs doesn’t balance more complex supply chains and higher inventories due to long distance relationships.

So more good news for the American construction industry. If you’re struggling in this crazy construction market right now, hang in there. Remember the words of wisdom from the old contractor, “When it’s good, it’s never quite as good as it seems it is and when it’s bad, it’s never quite as bad as it seems it is.”