The following chart produced by the Bureau of Labor Statistics compares the hourly manufacturing compensation costs of the US with other significant regions:
Japan’s rate is somewhat lower than that of the US, which is puzzling. If one factors in transportation costs, a product made in Japan should cost roughly the same as that product made in the US. Of course, the US rate is significantly lower than that of the Euro area.
It seems a viable investment strategy could be to identify products made in Japan and the Euro area that make up significant imports to the US and build manufacturing capacity in the US to compete.
The following report on one effect of the Tohoku earthquake serves as an example:
“In another development for the global electronics supply chain, two Japanese companies announced they have stopped production that amounts to 70% of the worldwide supply of the main raw material used to make PCBs. PCBs are used in all electronic products, from PCs to smart phones, to digital wristwatches.
The companies, Mitsubishi Gas Chemical Company Inc. and Hitachi Kasei Polymer Co. Ltd., said they will resume production within two weeks of the raw material called copper-clad laminate (CCL).”
These companies would have some advantage due to learning curve benefits and economies of scale, but this level of market concentration seems a likely target for competition.