Texas Nearing Parity With China On Manufacturing Costs

Speaking at Comerica Bank’s quarterly business forum, Comerica chief economist Robert Dye said it would soon cost about the same to manufacture goods in Texas as in China.

“You look at total business costs — this is the cost of labor, the cost of capital, securing a loan, the cost of energy, and everything else that goes into total business costs for an economy. Texas is approaching parity with China in many, many different ways, which is another way of saying that businesses no longer have an incentive to offshore their production. They’re coming back, particularly energy intensive businesses, that are able to take advantage of these very, very cheap energy prices that we have.”

The low cost of North American natural gas is helping revive domestic manufacturing across a wide range of sectors — including high technology and ceramics. Dye says other states are seeing similar gains against China, but to a lesser extent than Texas.

At the same time, wages in Chinese factories are on the rise, and the high cost of oil is making it more expensive to ship finished goods across the Pacific. 

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