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Manufacturing in the US has always been the lifeblood of the nation. From the nostalgia evoking 60s when the production sector was in full swing to the image of picturesque suburbs with blue collar workers, everything related to this domain and its glory is held sacred by economists hankering for a rejuvenation post the recession onslaught.

Over the past few years, some positive trends have been cautiously observed and experts have issued the statement: A comeback is imminent!


According to the Bureau of Labour Statistics and that of Economic Analysis, the ROI on manufacturing is a decent 37% and is poised to improve if the promise of growth actualizes. On an average this sector contributes 12% of the GDP which is about $2.09 trillion. Most importantly, one out of every six private sector vacancies hails from manufacturing and the number is rapidly rising as 60,000 new jobs are introduced every year.

But perusing data is rather like observing the symptoms of a change without investigating the forces at play beneath the surface. There are logical arguments based on facts which support the numbers and despite scepticism from many lobbies, it does seem that the US factories and units are all set for a grand revival.


The following global events have influenced the expansion and strengthening of the manufacturing domain and need to be taken into consideration if the possibility of a true-blue comeback is to be evaluated.

  • The rising awareness amongst consumers and governments of the often difficult conditions in which workers from South and South-East Asia are forced to labour. As a result of the expansive effect of the American dream, employees in China have negotiated for themselves pay-hikes that have bumped their remuneration to. The tax and cost benefits responsible for luring business away from the US have eroded considerably in value and in conjunction with logistics and transportation the recurring investment gap for manufacturers has reduced to a mere 4%.
  • The discovery of new oil reserves and the feasibility of shale drilling. The price of both oil as well as natural gas in the US has plummeted and is expected to drop further. Peers in Germany need to spend twice as much on fuel and power as their American counterparts. This is an immense advantage and the journey back home (or reshoring) is being led by stalwarts like General Electric (GE).
  • Elimination of quality testing hassles. Buyers are empowered with knowledge and as a result they expect the very best from their purchased products. Items sourced and created off-shore are tested under relatively ‘alien’ conditions. Such goods may react unpredictability when exposed to radically different surroundings. This effect is particularly pronounced on electronic equipment and vehicle spare parts. Instead of investing millions in simulating the ‘right environment’, manufacturing R&D teams are suggesting re-shoring as a way to ensure robust performance and lasting value.

A host of issues such as lead-times and logistics within the supply chain when operating offshore has also provided impetus to reshoring and thus a subsequent boost to manufacturing. However the real story will be unveiled by time and Production Materials Inc. is proud to contribute to the upcoming transformation of the economy.

Why American Made Means Something Again

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. 
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