For decades, outsourcing has stripped the U.S. of its once-proud manufacturing tradition, eventually getting to the point that “Made in America” became synonymous with higher labor costs and declining quality. Yet, recently, it seems hope began replace despair—American manufacturing finds itself in the middle of a renewal in both perception and reality.
As with all economic trends, no one simple reason can lay claim for the resurgence of American manufacturing; however, two major reasons do standout in turning around decades of decay:
There is no better place to start than with product and service quality. Once again, people and companies around the globe recognize that American-made goods are of higher quality due to both our technology regulations and workforce. As incomes have grown across the globe—a perfect example being the tripling of China’s disposable income per capita since 2004—there has been a rise in the demand for higher quality goods. If you combine this with sometimes poorly made products and unsafe work conditions and total landed costs for overseas goods, you can see why there is a greater push for American-made products.
It would be naïve to think that the rebound in American manufacturing is simply a case of patriotism. Business is business, and profits are still king. A recent study from the consulting firm AlixPartners estimates that the cost of manufacturing in the U.S. will gain parity with those of outsourcing to China. When and if this does take place, the argument that it is cheaper to offshore will no longer be valid, thus boosting American manufacturing even more.
At Production Materials, we are excited about the return of manufacturing to America. We’ve specifically noticed evidence of companies not wanting to carry a lot of inventory, which means bulk shipping from overseas isn’t in their best interest; therefore, the cost can be offset by going to a local company, giving a boost to the American-made industry.
There is little question that the U.S. (and especially our home state of Illinois) has seen some rough times when it comes to manufacturing jobs, yet we are hoping that as the world’s demand for higher quality products rises and the cost of off-shoring equal out, our country can regain its role as a manufacturing leader.