As you report, Hal Sirkin of the Boston Consulting Group has started to advise American manufacturers to locate in America if they are serving American customers (“Moving Back to America,” May 14, 2011). He is doing this not for patriotic reasons, or so he claims, but because the economics of going abroad is changing fast. Labor arbitrage, or taking advantage of lower wages abroad, is one of the main reasons for locating a factory in a country like China. However, Sirkin argues, the wages of factory workers in China have soared by nearly seventy percent between 2005 and 2010. The benefits from labor arbitrage are thus shrinking fast. According to Sirkin, manufacturers will be indifferent between locating in America or China by 2015. Wow! Granted that the benefits from labor arbitrage will keep shrinking, they will be there for the foreseeable future. The wages of factory workers in America will be higher than the wages of their counterparts in China for at least a generation, if not forever. If BCG predicts a manufacturing renaissance in America, watch the disclaimer about patriotism like a hawk.