Research gathered by the non-profit advocacy and consulting group, The Reshoring Institute (TRE), shows rates paid to laborers in China has significantly increased — as much as doubling in the past few years —  meaning China can no longer be consider a low-cost labor country, the institute says. 

The research covers global labor rates in 12 countries, comparing production workers, machine operators, manufacturing supervisors, and managers. The lowest-cost countries in the study are now India, Mexico, and Vietnam. While there are even lower-cost areas of the world, the Reshoring Institute focused its study on where most manufacturers are moving to now, after leaving China. 

Despite significantly higher labor rates in the U.S., manufacturers are also coming back to America, said Rosemary Coates, Executive Director of TRE in a statement about the report Oct. 18. "To be competitive in world markets and at home, U.S. manufacturers must automate production and redesign processes to extract labor costs, and make manufacturing more efficient," said Coates. 

"When comparing manufacturing in America versus other countries, you must consider the total cost of ownership and include all costs such as logistics, quality, time-to-market, import duties, inventory carrying costs, and geopolitical risks," she said. "Our clients are often surprised to find that when all costs are considered, American manufacturing can be competitive.”

With new funding and tax incentives now available through the Chips and Science Act, the Inflation Reduction Act, and the Build Back Better Infrastructure Bill, TRE says reshoring and expanding operations in America have rapidly become popular and economic choices for American manufacturers. Its stated mission is “to support companies starting, restarting, or expanding manufacturing in the United States.”