Cheapest Places for Manufacturing in the US: Top US States and Cities for Low-Cost Production

Jul, 26 2025

If you think high labor costs and sky-high real estate are just something manufacturers have to live with in the US, you’re not looking in the right places. Plenty of companies have quietly shifted production from pricey coastal cities to towns where rent is less than half, electricity is dirt-cheap, and the local government actually wants them around. The difference in total cost per unit can mean the difference between survival and shutting your factory lights for good. If you ever wondered why those “Made in America” labels turn up more from Arkansas than California, there's a good reason behind it—and it’s not just southern hospitality.

The Real Cost of Manufacturing: Breaking Down Expenses

Running a factory in the US means juggling way more than just wages; you’ve got to keep an eye on everything from energy rates to property taxes (and, weirdly, sometimes expensive trash collection). The price tag to manufacture a pair of jeans or a car part in Los Angeles is nothing like doing the same in rural Alabama. Let’s put the dollars and cents in the spotlight for a second:

• Labor costs: Unions, minimum wage laws, and local wage expectations can vary by as much as $8-$15 an hour between states.
• Commercial real estate costs: In 2024, industrial rents ranged from just $4 per square foot per year in Mississippi warehouse corridors to over $20 in New Jersey’s logistics mecca.
• Electricity and utilities: Some states, like Louisiana and Oklahoma, offer industrial electricity rates as low as $0.07 per kilowatt-hour—half what you’ll pay in New England.
• Taxes and incentives: Several states throw around decade-long tax abatements if you bring jobs or invest in equipment. Not all incentives are created equal, but combined, they can shave 5-15% off overall operating costs.
• Logistics: If you need to ship nationwide, “cheap” can backfire if you’re stuck hundreds of miles from highways, ports, or your target customers.

To make this less abstract, check out this table with real 2024 numbers from the National Association of Manufacturers and CBRE’s annual industrial reports:

State/City	Avg. Industrial Rent ($/sq ft/yr)	Avg. Industrial Electricity Rate ($/kWh)	Median Wage, Production Worker ($/hr)	State Corp. Tax Rate (%)
Mississippi (Jackson)	4.25	0.073	16.30	5.0
Arkansas (Little Rock)	4.80	0.074	17.10	5.3
Texas (Dallas/Fort Worth)	5.34	0.082	19.90	0.0*
Ohio (Cleveland)	5.10	0.089	20.00	0.0*
California (Los Angeles)	20.65	0.152	22.60	8.8
New Jersey (Newark)	19.90	0.137	23.00	11.5

*Texas and Ohio rely heavily on franchise or gross receipts tax instead of corporate income tax, so effective rates may vary by operation type and size.

If you’re looking for the actual cheapest place to manufacture in the US, states like Mississippi, Arkansas, and Alabama consistently rank at the top when it comes to low direct operating costs. For big, labor-heavy operations—think apparel, textiles, general assembly—these states are magnets. Even bigger names like Toyota and Mercedes-Benz have built huge plants there, and it’s not a coincidence.

Top States and Cities for Low-Cost Manufacturing

It’s not just about looking up a “Top Ten” list online and saying, ‘okay, let’s go there.’ The best spot for your factory changes depending on what you make, how much space you need, and who you plan to hire. Still, some areas continually pull in serious manufacturing investments thanks to their rock-bottom costs and business-friendly climates. Here’s a breakdown of the real MVPs when it comes to affordable manufacturing:

• Mississippi-Jackson & Tupelo: These cities are the poster children for cheap factories. Wages hover at the national low, regulations are un-fancy, and real estate is almost comically affordable. And if your supply chain relies on river and rail? Even better.
• Arkansas-Little Rock & Fort Smith: Little Rock isn’t just central—labor is almost 30% less than California, and utility rates undercut most of the country. Local colleges pump out skilled workers, making finding employees easier than you’d guess.
• Oklahoma-Tulsa: Cost per square foot stays low, while logistics hit the sweet spot between east and west. Electricity rates are under $0.08 per kWh. It’s a sleeper pick for logistics-heavy products.
• Georgia-Savannah: Major seaport access, generous state incentives, and a workforce that’s grown up with manufacturing in its blood make Savannah a hot spot. If you need to export or import, the savings on logistics alone are huge.
• Texas-Dallas/Fort Worth & El Paso: There’s a reason Tesla, GM, and dozens of parts suppliers opened massive plants here. No state income tax, a mammoth skilled labor force, and real estate still under national averages, at least compared to major metros. Plus, you can be on the highway to anywhere in a flash.
• South Carolina-Greenville: BMW put its biggest American factory here—labor, utilities, and a rush of state money make it hard to beat for heavy industry.
• Alabama-Huntsville: This area punches above its weight with rock-bottom costs and a robust aerospace and electronics labor pool.

One underrated consideration? Labor pool reliability. Mississippi and Arkansas are unbeatable for raw cost, but if your product needs loads of highly trained folks, you may be better off beefing up your HR budget and looking in Texas or Georgia, where workforce skills keep pace with wages.

Watch for “hidden” costs. Some ultra-cheap towns are cheap for a reason: scarce suppliers, bad logistics, and, sometimes, infrastructure that makes Whiskers’ old scratching post look modern. Ask around locally to dodge any curveballs, and be wary of rock-bottom offers; the catch might be fewer trained employees or slow permitting.

Bigger Than Just Wages: How States Attract Manufacturers

Companies don’t set up shop in rural Alabama just for the sunshine. Southern states get creative with their incentives. Here’s how recruitment really works—from tax breaks to workforce deals:

• Tax Abatements: States dangle tax breaks up to ten years or more for manufacturers investing over a certain amount. Mississippi’s Advantage Jobs Program can return up to 4% of payroll back to you in annual refunds. Arkansas and Alabama have similar programs.
• Free or Discounted Land: Especially for multi-million-dollar investments, local governments have given away giant industrial sites just to lure manufacturers.
• Fast-Track Permitting: Areas like Savannah, Georgia throw muscle into getting permits processed fast, promising approvals in half the time of major metros.
• Custom Training: Southern states often partner with technical colleges to build custom training pipelines so you hit the ground running. Alabama’s AIDT is a good example—they’ll even train employees for your exact production lines at minimal cost.
• Utility Discounts: If you’re a high-power or water user, many city utilities offer big, unpublished discounts in exchange for long-term contracts.

This is why so many big names from around the world plunk down a billion-dollar bet on states like South Carolina or Texas. Governments race to make your launch easier—and their locals genuinely want the jobs. Just remember, these offers can be tied up in strings: job creation numbers, local sourcing, or even clawbacks if you bail out early. Scrutinize every line in the package, and get legal advice before you sign.

It’s also worth pointing out that some regions offer intangible perks. You might end up saving money in the long run with less turnover, higher worker loyalty, or just smoother relationships with local folks. The difference between a business-friendly place and a city that treats you like a cash cow? It can tilt your balance sheet further than a few cents off your power bill.

Tips to Nail Down the Cheapest Manufacturing Spot

So, you’ve read this far and want that magic combo of low costs, easy setup, and good logistics. There’s more to it than throwing darts at a map or chasing the latest ChatGPT-generated cost rankings. A few battle-tested strategies (and some personal anecdotes that could only come from rolling up my sleeves—or whiskers up close to a crumpled blueprint):

1. Shortlist based on your product’s needs. If you need ultra-cheap labor for hand-assembly, the Deep South wins every time. Need engineers for robotics? Texas or Ohio probably outpace the lowest-cost options if your tech requirements are high.
2. Don’t get blinded by single factors. Rent might be $2 a foot cheaper in one town, but if you’re spending 40% more to truck goods across bad roads or find skilled labor, you’ll end up losing out.
3. Visit in person, talk to local suppliers and officials. Online stats never show you the whole picture. Eat lunch in a diner and ask around, or sit in a union hall for half an hour. You’ll get the real story.
4. Workforce pipeline matters. Look for cities with nearby trade schools or colleges, and check what local manufacturers are already paying.
5. Factor in quality of life for your workforce. We once lost a killer manager because his kids hated the local school—tiny details like these show up in turnover stats.
6. Compare every incentive’s fine print. Some states offer up cash front and center, while others load up on credits you’ll never use. If you’re not paying state income tax in Texas, a “big” incentive could be meaningless.
7. Try leasing before buying property, or choose an option to expand. Many small manufacturers ended up trapped by cheap but too-small real estate.
8. Apply for utility discounts and local grants. Many cities will match federal investment credits (look into the CHIPS Act for electronics, for instance) with their own dollars if you just ask.
9. Check crime and infrastructure. Absurdly cheap sometimes means you’re next to a shuttered mall or unreliable roads—run the numbers with a worst-case scenario in mind.
10. Network with peers. The folks who have already set up factories in your target city are usually happy to share the stuff nobody writes about, from quirks in local insurance to which suppliers deliver on time.

Bit of a side note, but if you’re a pet lover like me (my cat Whiskers insists on quality in both food and catnip), ask about pet-friendly housing if you plan to relocate management or skilled staff. Small-town America may surprise you with perks, both for humans and their furry supervisors.

If you put all this together, here’s the truth: Yes, there are ultra-cheap places to manufacture in the US, with Mississippi and Arkansas often taking the top slots for lowest labor and overhead. But finding the rock-bottom price can backfire if the fit isn’t right for your product or your people. Seek out balance, hunt for overlooked incentives, and—just like sourcing a new part—test before you commit. That’s how the savviest manufacturers keep those ‘Made in the USA’ labels printing, and profit margins healthy.