US Manufacturing getting a push
Wal-Mart wants more US-made goods and is holding a series of supplier conferences to encourage more U.S. manufacturing. The government is also pushing hard to bolster U.S. manufacturing with money, centers of excellence, advisory groups and other means. Suddenly, it’s fashionable to “make it in America” again. And it’s happening. U.S. manufacturing employment is actually growing after a multi-decade decline and products previously made in China are now being made, or planning to be made, right here in the U.S. of A.
The so-called re-shoring movement has gotten a lot of discussion in the press, social media, etc. and reflects a trend among manufacturers to reduce the amount of work being outsourced (especially to China) and start making those products in the U.S. again. Companies are not re-shoring out of patriotic spirit – it makes sense from a financial and business perspective. Whereas incredibly low labor rates made Chinese-manufactured parts and products considerably less costly a few years ago, changing labor rates, currency exchange, logistics costs, and supply chain risk have tipped the balance. Now, overall costs are quite comparable for many types of products so the decision is more apt to hinge on strategic factors like shorter lead time, quality and reliability of supply, and having design, marketing and manufacturing in close proximity.
Manufacturing is definitely coming back to life but it is not without its challenges and limitations. Much of the public elation and government support is centered on jobs – more manufacturing mean more manufacturing jobs – right? Well, yes but not in the same way it was in the past. One of the reasons manufacturing is coming back is that automation is reducing the labor content of many products making labor rates are a much smaller factor in cost comparisons – and U.S. production becomes more cost competitive. When manufacturing comes back, there are fewer jobs created than were lost when the production moved overseas.
Bringing manufacturing back does have very important benefits. Even though there are fewer jobs created, they are good jobs – not repetitive, mind-numbing production line tasks but technical and skilled labor programming machine controllers, managing automated equipment, and supply chain management. Unfortunately, young people are not aware of what manufacturing jobs are like today and are not choosing manufacturing-and supply chain related career paths in school and training centers.
Manufacturing is changing for the better, in many ways. There are some challenges, as there always are during transitions. U.S. manufacturing’s future looks very bright, indeed.