Question

What is one difficulty companies often face when choosing to manufacture their goods in the USA? Group of answer choices Lack of Purchasing Power from Consumer base Lack of Resources for Raw Materials War and Civil Unrest High Labor Costs

Answer 1

High labor costs in the USA are one major difficulty companies face when deciding to manufacture domestically, alongside expensive land for factory locations and complexities in calculating the true production costs due to governmental controls in other countries.

Step-by-step explanation:

One difficulty companies often face when choosing to manufacture goods in the USA is high labor costs. Countries like the USA have established minimum wage laws and unionized workforces which can drive up the cost of production. This is a stark contrast to poorer countries, where labor is often significantly cheaper, leading many corporations to relocate factories abroad. The challenge of high labor costs is exacerbated by globalization and the search for competitive pricing, putting pressure on local manufacturers to seek cost-efficient solutions. The land is another factor. Costly locations for building factories, such as near urban centers, are avoided in favor of cheaper land, usually found at the fringes of cities where spatial economics make more sense.

Additionally, difficulties with measuring the true cost of production in countries where government controls can distort prices, like China, can also influence a company's decision to manufacture domestically or abroad. Anti-dumping complaints, tariffs, and import quotas are often tools used by governments to protect domestic industry, adding layers of complexity to the decision-making process for companies considering local manufacturing.

Answer 2

High Labor Costs

Step-by-step explanation:

The United States has very high labor costs relative to most of the rest of the world. This is simply because the United States, as a highly developed country, has very high average wages in all industries.

This is a problem for manufacturing companies because it raises their labor costs. And the problem becomes bigger for the United States as a country in a globalized economies: companies can simply choose to locate to other countries where labor costs are lower, like China, Vietnam or Bangladesh.

This is perhaps the main reason, according to many economists, why American manufacturing has declined in many areas of the country, particularly in the Rust Belt.