Economist predicts Latin America primed for manufacturing comeback

August 12, 2008

An economist for the fabricating and metalworking industry predicts Latin America, once considered a growth area for manufacturing but overwhelmed by competition from the Far East, will soon see a manufacturing revival.

"The once formidable benefits provided by manufacturing in China, India, and other Asian states are eroding," said Dr. Chris Kuehl, economic analyst for the Fabricators & Manufacturers Association, Intl. (FMA).

"The most important factor is cost of transportation, and it's feeding what's being referred to as 'near shoring,'" Kuehl said. "This means hauling cargo across the ocean in a diesel-burning ship isn't as cheap as it once was. It's now more cost-effective to be closer to the U.S. market, which has sparked a wave of relocation plans."

According to Kuehl, rising labor and energy costs in China and other Asian supplier states, as well as a lack of capacity, point to a return of the manufacturing sector to Mexico, Central America, South America, and even the U.S.

Based in Rockford, Ill., FMA is a professional organization working to improve the metal forming and fabricating industry.

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