Export manufacturing has been the unsung hero of the U.S. economy for the past few years. Despite all the public focus on the trade deficit, little attention has been paid to the fact that U.S. exports have been growing about three times faster than gross domestic product since 2005. As a share of the U.S. economy, in fact, exports are at their highest point in 50 years.
But this is just the beginning. New research from The Boston Consulting Group shows that U.S. exports are likely to surge in the foreseeable future. Before the end of the decade, we project that the U.S. will capture up to $130 billion in annual exports from other nations. Combined with production work that will likely be “reshored” from China, these higher U.S. exports could create 2.5 million to 5 million American jobs in factories and related services by 2020.
Why such optimism? Because the cost structure of manufacturing around the world continues to shift in America’s favor. On the one hand, the U.S. is steadily becoming one of the lowest-cost countries for manufacturing in the developed world. By 2015, the U.S. will have an export cost advantage of 5 to 25 percent over Germany, Italy, France, the U.K., and Japan. On the other hand, as we’ve explained in a previous BCG report, rapidly rising wages and other costs in China are eroding that country’s once-formidable advantage as an export platform for goods consumed in North America.
Our new research, part of BCG’s ongoing study of the changing global economics of manufacturing, focuses on U.S. cost-competiveness trends versus those in Western Europe and Japan. Developed nations account for around 60 percent of global manufactured exports. As a result of this new analysis, BCG has raised its estimate of U.S. job gains published earlier this year in U.S. Manufacturing Nears the Tipping Point: Which Industries, Why, and How Much? That report predicted the U.S. would gain 2 to 3 million jobs from higher exports and production work shifting from China to the U.S.