I mentioned this a bit ago, but it seems obvious to me that if energy prices continue to stay at, or increase from, their present level, the business model of the 90’s which outsourced manufacturing to places with low wages and then sold goods where prices are high, is on its way out. The model depends on transportation costs being vanishing small compared to manufacturing costs.
But if transport becomes significant then the profits disappear…
So this news today is interesting:
“As the cost of shipping continues to soar along with fuel prices, homegrown manufacturing jobs are making a comeback after decades of decline.
While it once cost $3,000 to ship a container from a city like Shanghai to New York, it now costs $8,000, prompting some businesses to look closer to home for manufacturing needs.”
Read the full article here.
The long term effect may well be the return of small local manufacturing plants. Which would be the return of good paying jobs all around…