Where Does the US Go to Manufacture Goods After China?

Economy

Published: May 22, 2019 7:05 am

Last Updated: January 6, 2020 4:27 am

China has by far the largest manufacturing economy in the world. It is followed by the United States. For companies that want to flee China because of tariff wars, the list of nations that already have large capacity is fairly small. Several are logical alternatives to China though, because of both their capacity and likely low labor costs.

Any analysis is lacking without information on what kind of manufacturing facilities and labor are already in place.

According to Brooking’s research posted last year, China’s manufacturing output in 2015 was $2.01 trillion. The United States followed at $1.86 trillion. Several other nations on the list have high labor costs, which means they may not be ideal alternatives. Japan ranks third in the world, with manufacturing output of $1.06 billion. While it provided cheap goods for the United States three or four decades ago, labor costs have risen quickly.

Germany is fourth on the list at $700 billion. Its labor costs are extremely high. South Korea is fifth at $372 billion. U.S. companies do some of their manufacturing there, but labor costs have risen there are well. India, which has lower labor costs, is next on the list, with output of $298 billion.

The nations on the list with low labor costs are Mexico, with an output of $175 billion in the survey, followed by Indonesia at $155 billion. Most of the balance of the list are nations in Europe and Russia, Turkey and Taiwan.

There are several emerging nations, like Vietnam, but their capacity is still relatively small.

The Brookings list shows the difficulty of locating manufacturing capacity anywhere close to that of China. While that means some nations have the ability, in terms of labor and appropriate manufacturing facilities, they likely offer limited solutions.

China is also one of the nations that control the world’s oil, as well as one of the countries spending the most on war.