Although U.S. citizens continue to struggle in the current state of the economy and job market, we are experiencing a “made in USA” manufacturing revival. More and more manufacturers are going back to their roots – back to the American manufacturing jobs that supported families in the 1950s – except this time they’re using technology instead of toolboxes.
While digging itself out of the hole the recession created, the U.S. has seen significant manufacturing growth – 500,000 jobs were created in the last three years – for the first time in more than a decade. Also in the last three years, the U.S. added more net manufacturing jobs than the rest of the seven wealthiest nations put together. Germany and Canada were the only two other countries who also saw increases.
Why the shift from outsourcing?
Well, in general, higher wages and energy costs have made it much more expensive to ship products from countries with cheaper labor. The United States’ manufacturing unit labor costs fell 11 percent in dollar terms between 2002 and 2010, while Japan’s rose 3 percent and Germany’s rose 41 percent. Some of the country’s largest companies, like Ford, General Electric and United Technologies, have brought manufacturing jobs back home.
Also, American productivity growth surpassed Europe’s, meaning “made in USA” manufacturing has also become more effective. After the rise of shale in gas production, U.S. manufacturing plants have also had access to cheap energy. For that reason, we have an advantage over other countries; they are experiencing high global oil prices and high fuel costs for transportation. Labor savings at low-cost plants in other countries become irrelevant because it is expensive to ship goods thousands of miles.
These factors have made “made in USA” the more attractive option.
Who is making the change?
Retailers are quickly catching onto this trend as it allows them to ship items more quickly to their customers, increasing customer loyalty in an extremely competitive market. Wal-Mart, a company that was once a globalization pioneer, plans to save money by increasing American supplier spending by $50 billion over the next decade. Others, like airplane manufacturer JetBlue, also use American manufacturing.
Manufacturers and resellers of technology products, especially, are seeing the value of the American-made comeback. For example, Apple recently assembled one of its Mac computer lines in the U.S. While clothing items don’t usually require a user’s manual, technology products require more hands-on help. Education is important at every level – from manufacturers and IT/support staffs to resellers and users – to ensure that devices perform properly. And that just isn’t possible when the manufacturer is thousands of miles away.
What are the benefits?
- Economy – While outsourcing once seemed cost-effective, American manufacturing benefits the economy as a whole. Manufacturing represents 67 percent of private-sector research and development spending and 30 percent of U.S. productivity growth, according to Finance Time. Every $1 of manufacturing activity returns $1.48 to our economy.
- Security – Not being able to oversee the manufacturing process can pose many risks to supply chain managers. A lack of knowledge and communication between the company and the outsourced manufacturers could cause disruptions in business, loss of product or revenue and, eventually, unhappy customers.
- Support – Speaking of unhappy customers, people who purchase technology products will be much more satisfied with their experience with access to technical support. (The rise of smartphone usage is making this increasingly important.) It is difficult to deliver quality support services for technical devices from thousands of miles away. When their products are made in the U.S., it cuts out the confusion. They have a better chance of reaching a live person when they call an American manufacturing company with questions. And when they have a question about a repair, they can also speak directly to the person who made it.
Where do you stand in the made in USA vs. globalization debate?