An increasing number of news articles are reporting on the increasing strength of manufacturing in the USA (and globally, actually).
After years of American companies shipping jobs and contracts overseas, some are choosing local manufacturers or even “re-shoring” – bringing those jobs and work back to the United States.
One-fourth of more than 850 companies surveyed by MFG.com, a global online marketplace for manufacturers looking to source custom parts, returned work to North America from overseas in the last quarter of 2010.
The “decrease” in manufacturing in the USA has been exaggerated as I written for year (manufacturing has grown steadily over the last few decades in the USA). It is true though manufacturing in some plants has moved overseas. Over the last few years more and more stories report on American companies moving manufacturing back to the USA that they had moved offshore previously.
The Institute for Supply Management most recent survey reports a surge in US manufacturing to its highest reading in nearly seven years.
“A lot of companies who have gone there to take advantage of cheap labor are starting to tell us that if you (calculate) total … cost and don’t just look at wages, it’s actually not worth it,” says Jeremy Leonard, consultant for Manufacturers Alliance/MAPI, an industry-funded research group.
U.S. manufacturing employment, after peaking at 19.4 million in 1978, is 11.6 million, though automation also contributed to sizable job losses. More than 2 million factory jobs were cut in the recession alone. Yet, the U.S. still had 21% of global manufacturing in 2008, more than any other nation.
For example, he says, making the device in Louisville already has allowed engineers to work closely with production managers and assembly-line workers to perfect the product’s design via prototypes. The approach has helped the company eliminate redundant parts and trim per-unit costs by $20.
By contrast, he says, with the heater made in China, “You ship it abroad, guys make it, and if there’s a problem, it’s not going to be fixed initially.” The company, he says, also worries that China’s recent decision to let its currency rise against the dollar will “drive our costs up.”
GE plans to make other advanced products in the U.S., noting a 30% Chinese cost advantage likely has tilted to roughly a 6% U.S. edge when figuring lower inventory expenses and fewer delivery snafus.
Within five years, he says, GE plans to move a “significant piece” of overseas appliance production to the U.S., creating hundreds more jobs.