High Energy Costs Could Bring Back Jobsadmin
CIBC World Markets Chief Economist Jeffrey Rubin thinks high energy costs could result in a sort of reverse globalization, as some overseas manufacturing is forced to return closer to home.
Rubin says the cost of shipping a standard 40-foot container from East Asia to the eastern U.S. has risen from $3,000 in 2000 to about $8,000, and could reach $15,000 as oil approaches $200 per barrel.
“That’s great news if you are the United Steelworkers of America,” says Rubin. “Long lost jobs will soon be coming home. And the more that oil and transport costs rise for Chinese steel exporters, the more that North American steel wage rates can grow. But if you’re a steel buyer, your costs are going up regardless of whether you’re sourcing from China or Pittsburgh.”
Instead of finding cheap labor on the other side of the world, Rubin says, companies will look for the cheapest labor within a reasonable — and affordable — distance.