By Samir Kagalwala – Power Magnetics Consultancy
News abound that not only the US could become energy self-sufficient soon but also a leading exporting country. The increasingly found natural gas fields in several states and the breakthrough technology, hydraulic fracturing known as ‘fracking’ to release the natural gas trapped in shale formations underground, are behind the bold news. Recently, I sat through a paper presentation that indicated that the US could have sufficient wind energy to generate needed electricity if pursued.
This energy revolution would provide the US a tremendous advantage in many ways including: not relying for energy on other countries and in-country manufacturing i.e. manufacturing competitive edge. These, in turn, would create worry for crude oil exporting countries around the world and low cost manufacturing countries America is depending on at present.
The energy self-sufficiency is not too far in future either. Reports show that for the foreseeable future, natural gas prices will remain 50 percent to 70 percent cheaper in the US versus Europe and Japan. The International Energy Agency (IEA) predicts America will surpass Saudi Arabia as the world’s largest oil producer by 2015. Another report from Alix Partners indicates the China and US cost would equal in 2015 should increase in all three cost factors – Wage Rate, Exchange Rate, Freight – are 30 percent, 5 percent and 5 percent respectively.
Higher energy cost and, in turn higher freight cost offshore compared to the US would help decrease the offshore manufacturing cost advantage.
It seems that the predictions are not overly pragmatic. The production cost difference between US and offshore manufacturing is progressively narrowing. The energy self-sufficiency would reduce the difference even further. May be it is already closer than we think to a brink of the threshold, ready to cross over.
With the energy revolution, the cost of manufacturing within US for the magnetic devices and components they are made of would again be favorable. Not just to produce to meet domestic requirements, but for exporting too.
What do you think? What is your take on it? Are you presently producing/procuring offshore? Do you see bringing back in near future your off-shore manufacturing? Are you now seriously considering producing new products within US rather than off-shore? If yes, what are the decision criteria? Do you have other than magnetic devices and components that you might be considering returning home?
I look forward to your valuable input to share with our blog community at large and for the benefit to all. Ways to participate are: comment to the blog below and/or contact me via phone #951-522-7035 or email at Samir@powermagneticsconsultancy.com.
About the Author
Samir Kagalwala is a chief consultant at San Diego based Power Magnetics Consultancy (PMC). His keen ongoing interests in Magnetics and Magnetic Devices take him deep into covering from A to Z – Areas of scientific research to Zero defect production. Globally he presents papers, write articles, offer educational seminars and provide consulting services. He has a unique combined experience in manufacturing and design of Wire Wound Components in Power Electronics. In over 30 plus years in the industry, he has set up magnetic manufacturing facilities globally, resolved short term and long term manufacturing issues meeting internal and external customer needs, bridged Design and Manufacturing for improved products. He has consistently satisfied customers with cost reduction and quality coils. He developed design rules and guidelines for manufacturing and helped increase manufacturing professionals’ understanding of the design criteria. He worked for Philips Electronics, Motorola and Zenith Electronics in various capacities. He holds MBA from DePaul University, Chicago, B.S. in Electrical Engineering and B.S. in Mechanical Engineering.