View Complete 2011 Structural Cost Report 
Summary
Foreword
Chapter 1 - Raw Cost Index
Chapter 2 - Corporate Tax Rates
Chapter 3 - Employee Benefits
Chapter 4 - Tort Costs
Chapter 5 - Energy Costs
Chapter 6 - Pollution Abatement Costs



The trade-weighted average structural cost burden (which includes corporate tax burden, employee benefits, tort costs, pollution abatement compliance, and energy costs) of U.S. manufacturers relative to their counterparts in our nine largest trading partners rose to 20 percent, up from 17.6 percent in the 2008 cost study.

  • U.S. manufacturers enjoyed a raw cost index (which represents production costs that are under the direct control of manufacturers) than is 9 percent lower the trade-weighted average of their 9 largest trading partners.  In all previous cost studies, the U.S. RCI was higher than the trade-weighted average of the 9 countries.

  • As a result, the RCI advantage is completely erased by the structural cost burden.  All in, U.S. manufacturing costs are 9.3 percent higher than their 9 largest trading partners on a trade-weighted basis.

  • The increase is due entirely to widening gaps with our foreign competitors with regard to corporate tax rates and employee benefits.  Taken together, these two structural costs account for 85 percent of the total gap, up from 75 percent in the 2008 cost study.

  • A bright spot in the update is trends in commercial tort costs, which have come down considerably in recent years.  As a result, the foreign advantage with regard to tort costs has fallen steadily since the 2006 cost study, and is now estimated at just 1.6 percent below the U.S. burden.

  • U.S. manufacturers continue to enjoy a modest advantage with regard to energy costs, which, at 0.9 percent is unchanged from the 2008 study.

  • The burden of pollution abatement compliance is also unchanged, but this is mainly due to a lack of new relevant data for the United States.  Unlike most other countries in the study, the United States does not collect systematic information on a regular basis, and the last such survey was completed in 2005.


 

United States
Canada
Mexico
Japan
China
Germany
United Kingdom
Korea
Taiwan
France
Average of 9 partners
Raw Cost Index
$29.83
$40.43
$18.99
$40.27
$12.41
$55.92
$48.98
$34.75
$23.85
$34.79
$32.75
Corporate Tax Rate
-9.0
-10.05
0.7
-15.0
-10.6
-12.0
-15.8
-23.0
-6.7
-8.6
Employee Benefits
-3.33
-12.87
-5.74
-5.57
-1.27
-2.58
-5.83
-8.84
7.64
-5.7
Tort Costs
-1.6
-1.8
-1.7
-2.3
0.8
-1.8
-2.3
-2.3
0.3
-1.6
Energy Costs
-0.7
1.9
1.2
0
1.9
3.9
4.2
-0.8
3.2
0.9
Pollution Abatement
-0.7
-3.3
-0.7
-3.4
-0.2
-2.7
-0.5
-3.4
-0.2
-1.8
Effective Cost Index
$29.83
$34.24
$14.03
$37.77
$9.14
$50.66
$41.54
$27.69
$14.68
$36.24
$27.28
Foreign Cost Advantage
-15.3%
-26.1%
-6.2%
-26.3%
-9.4%
-15.2%
-20.3%
-38.4%
4.2%
-16.7%
U.S. Structural Cost Burden
18.1%
35.3%
6.6%
35.8%
10.4%
17.9%
25.5%
62.5%
-4.0%
20.0%

© 2014 Manufacturing Institute
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