The Manufacturing Cost Components For A Bunch Of Different Things

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		Home Tech Finance Markets Politics Strategy Entertainment Advertising Retail Sports Life Wednesday, May 1, 2013 The Manufacturing Cost Components For A Bunch Of Different Things One of the big economic stories in the world is the American manufacturing renaissance.  The theory is simple.  Falling domestic energy costs and rising overseas labor costs will encourage manufacturers to bring production back to the U.S. While the statements about labor and energy costs could bring back some of manufacturing at the margin, economists are warning us that it is unlikely to cause a wave of reshoring. The truth is energy and labor are relatively small components of manufacturing costs.  Morgan Stanley analysts point this out in a new report: Let’s put the importance of labor costs in its proper perspective. It may be surprising to note that labor accounts for a relatively small 16% of total manufacturing costs in the US. This moves as high as 30% for certain sectors such as electronics and apparel, to as low as 6-7% for sectors such as Motor Vehicles, where capital costs are so much more significant. Raw materials and components are clearly the biggest drivers of input costs. ... This US natural gas “dividend” clearly has broad implications for the manufacturing industries to the extent that natural gas and energy costs are a significant component of cost. This is certainly the case for sectors such as Chemicals, Paper and Aluminum where total energy prices range from 5-9% of total material cost. However, we highlight that energy-intensive sectors only account for ~25% of total US industrial output    For the bulk of sectors, energy is a relatively minor influence, accounting for just 2% of COGS and just 1-2% for sectors such as Electrical Equipment, Machinery, Electronics, Transportation Equipment and Autos. Here's a chart: Read » Also On Money Game Today: The Stock Market Has A Long History Of Rewarding The Bulls CHINESE MANUFACTURING SLOWS, HSBC PMI SLIPS TO 50.4 Advertisement CHART OF THE DAY: House Prices Are Back To Late 2003 Levels CHART OF THE DAY: The Trend That Tells Jim O'Neill China Is On The Right Track CHART OF THE DAY: E-Cigarettes Are A Small, But Rapidly Growing Problem For Big Tobacco Share this: Facebook Twitter Digg Reddit StumbleUpon LinkedIn The email address for your subscription is: ipat39@gmail.com Change Your Email Address | Unsubscribe | Subscribe | Subscribe to the Money Game RSS Feed Business Insider. 257 Park Avenue South, New York, NY 10010 Terms of Service | Privacy Policy

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