But many companies are stepping gingerly, avoiding sweeping claims and spelling out what “Made in the U.S.A.” means for their products. Consumers are more shrewd about how few consumer goods actually are made in the United States, leaving companies less wiggle room about the origin of products.
The Whirlpool Corporation, for example, specified in full-page print advertisements this year that 80 percent of its appliances “sold in the U.S. come from our U.S. factories.” Despite its deep American roots, the 101-year-old company — which makes Maytag, Amana, KitchenAid and Jenn-Air products — has, like other corporate giants, moved some manufacturing abroad.
As a result of its centennial celebrations last year, some consumers have urged the company to talk more about its American origins, said William Beck, a senior marketing director at Whirlpool, which spent $57.4 million in 2011 on advertising, according to Kantar Media, a WPP unit.
In recent months, the appliance giant has been underlining its American factories, and noting in its overall brand advertising that it employs about 22,000 workers (15,000 of them at its manufacturing plants), and spends $7.4 billion annually on operating and maintaining its factories in Iowa, Ohio, Oklahoma and Tennessee.
But Whirlpool, whose ad drew a full-page rebuttal from the International Association of Machinists and Aerospace Workers accusing it of shutting factories in the United States, said nostalgia and similar sentiments do not drive its sales. “Whirlpool’s key differentiating points are quality and innovation,” said Mr. Beck, and “the icing is that, hey, we’re made in the United States.”
Whirlpool does not share its market research, but other market studies show that customers increasingly take note of where a product is made. Perception Research Services International, in a September study, found that four out of five shoppers notice a “Made in the U.S.A.” label on packaging, and 76 percent of them said they would be more likely to buy a product because of the label.
While shoppers, especially those over 35, say they want to help the economy by buying United States-made goods, “the motivating factors actually may be quality and safety,” said Jonathan Asher, executive vice president of Perception Research Services. The company, which is based in Teaneck, N.J., surveyed 1,400 consumers last summer. “People are paying attention in categories that are ingested like food, medicine and personal care products, but less so in electronics, office supplies and appliances,” he said.
In a separate study, the Boston Consulting Group found that 80 percent of consumers surveyed said they would be willing to pay more for “Made in the U.S.A.” products than for those carrying a “Made in China” label.
They would pay the biggest differential for items like baby food and wooden toys, and a smaller percentage for electronics, apparel and appliances, said Kate Manfred, director of the group’s Center for Consumer and Customer Insight in the Americas, which released the study in mid-November.
“Safety and quality, and keeping jobs in America, are the important factors,” she said.
Bixbi, a Boulder, Colo., pet treat provider, has relied on safety to increase sales. The company, which started in 2008 amid revelations of tainted dog food ingredients imported from overseas, sells dog treats made from locally raised chickens and other animals.
“Our sales have grown 600 percent each year,” said James Crouch, who founded the small company with his brother, Michael. “Locally sourced is a key advantage.”
But for all the talk about American-made goods, Bixbi is one of the few clients that have adopted “Made in the U.S.A.” marketing, said Dave Schiff, co-founder of Made Movement, a Boulder advertising firm that handles the Bixbi account.
“Some customers think that the American-made label may just be window dressing and companies can be reluctant to use it,” Mr. Schiff said. He and two colleagues started their firm in April to enlist client companies that manufacture in the United States.
Classifying goods as American-made can be dicey, he discovered, because many products have parts that are made outside the United States. To generate interest in such products, as well as a revenue stream, his firm in July started a Made Collection Web site to sell American-made goods.
But finding goods manufactured in the United States for the Web site has been a challenge, Mr. Schiff said. Many items on the Web site are expensive, like a $225 dress shirt from Hamilton, the Houston company that makes Made in America apparel that competes with brands like Levi’s Vintage Clothing and Orvis, which also capitalize on manufacturing in the United States.
Companies are keenly aware that highlighting American-made credentials can backfire after the experience of the apparel maker Ralph Lauren. Renowned for its American nostalgia, Lauren provided uniforms for the 2012 United States Olympic team that were made in China. That resulted in threats of a boycott by some angry consumers.
Some companies like Exxel Outdoors, which makes camping, hunting and fishing equipment, have considered, then rejected, marketing their American-made credentials. Exxel makes two million sleeping bags annually at its Haleyville, Ala., factory.
“We do manufacture in the United States, but there are a lot of variables, like where the components are made. Some of ours come from abroad, so it could be confusing,” Harry Kazazian, the company’s chief executive, explained.
“Simply using the Made in the U.S.A. label is not enough,” said Jaynie L. Smith, chief executive of Smart Advantage, a consulting firm based in Fort Lauderdale, Fla.
“Companies can be foreign owned,” said Ms. Smith, who wrote “Relevant Selling,” a book about corporate sales strategy. “But they need to say that ‘We are still on your soil. We create jobs. We make quality products, and we’re delivering them quickly.’ ”
The Case For and Against ‘Made in the USA’
by MAM TeamJanuary 7, 2013
Perhaps this idea isn’t all that new; it’s just a timely reminder that we can become more strategic with our spending.
My father-in-law announced to the family several years ago that he was only interested in giving and receiving gifts that were made in the U.S. Frustrated by the prospect that we’re no longer globally competitive in many manufacturing sectors, he insisted we avoid items made in China — or anywhere else for that matter.
That year he gave each family member an envelope with a crisp, uncirculated Franklin ($50) for Christmas. Thankfully, the Treasury still prints those here in the U.S.
Most of us made an honest effort but found the exercise quite taxing. It’s hard enough to find just the right gift, and then you find that it has been manufactured elsewhere.
Perhaps this issue requires deeper thought and more critical analysis. On a monthly basis we hear of wild swings in unemployment numbers. The rates for new claims go up; then they go down. But basically the rates have hovered around 8 percent for far too long.
There is no argument that creating and saving jobs is in our best interest. The hard question is which jobs to save and, most importantly, discovering the jobs to be created through entrepreneurial exploits.
There are a fair number of critics — even economists — of this “buy American” push who claim there’s nothing American about it. Their contention is that we should buy American only so long as it’s the best price and not simply to create or sustain jobs.
Economics tries to take consumer emotion out of the equation and keep things simple. There is a supply and demand curve applied to the manufacture of a particular good that identifies the likely quantity of demand at a particular price point. And the incentive to producers is in the anticipated profit margins gleaned through efficiencies and their manufacturing capacity.
And in the end, the economics will argue that each economy would be better off producing and manufacturing those products for which there is a competitive advantage. These advantages include an abundance of ingredients, such as access to raw materials, labor, technology and transportation.
We’re really talking about product differentiation when we promote “made in America” through a campaign meant to create or save jobs. And this is squarely a marketing function. If we can feel better about ourselves because we’re helping our fellow citizens by buying certain items, then we can argue for a premium — just as we would for purchase of a product that comes with a better warranty or in one’s favorite color.
But how long will this work? Is this truly sustainable in the long run?
David R. Henderson, who is an economist at the Hoover Institution, explained it this way in an interview with John Stossel:
“Almost all economists say it’s nonsense. And the reason is: We should buy things where they’re cheapest. That frees up more of our resources to buy other things, and other Americans get jobs producing those things,” Henderson said.
Since we are competing globally, it makes no economic sense for us to continue manufacturing products that are no longer viable in the global marketplace. Americans need to continue to create jobs based on innovation and new ideas.
“A huge part of the history of mankind is an increase in the division of labor. And that division of labor goes across national boundaries,” Henderson said.
Whether you believe spending $64 on products “made in America” will make a difference for job creation, I believe more meaningful jobs will be created in our economy as the result of innovation and entrepreneurial endeavors. I wonder how I’ll spend this year’s crisp new Franklin.
Is There Any Hope For America? Absolutely!
by MAM TeamJanuary 2013
Is the U.S. finished? It’s awfully tempting to think so. Political dysfunction, crushing debt, a bad economy and a sinking middle class are not exactly signs of vigor. Two failed wars have dealt huge blows to its reputation and prestige. Not to mention the gun culture and the junk food and the [fill in your favorite example of American pathology here].
But if the U.S. were a stock, I’d buy it. Despite the gloomy news, its future is looking brighter than it has in years. One reason is the new energy revolution, a phenomenal reversal of fortune that nobody foresaw. The country is awash in cheap new supplies of unconventional oil and gas that are being unlocked with new technologies. This unexpected bonanza is rocket fuel for the economy.
It’s also creating millions of new jobs – not McJobs but the kind of well-paid industrial ones that are supposed to have disappeared forever. “These jobs include people working on rigs in Pennsylvania or North Dakota, manufacturing equipment in Ohio or Illinois, and providing information-technology services in California or legal services to royalty owners nationwide,” energy expert Daniel Yergin wrote in The Wall Street Journal.
The energy jobs of the future were supposed to be green. But it turns out they’re brown. In case you think that’s a bad thing, here’s good news: Greenhouse-gas emissions have plummeted as clean natural gas replaces dirty coal.
Cheap, reliable, abundant energy is helping to fuel another big trend – reshoring, the opposite of offshoring. The China advantage is disappearing fast, and the U.S. is on the verge of a manufacturing renaissance. A recent report by the Boston Consulting Group (Made in America, Again) concludes: “Within five years, rising Chinese wages, higher U.S. productivity, a weaker dollar, and other factors will virtually close the cost gap between the U.S. and China for many goods consumed in North America.”
Dozens of leading U.S. companies have already set up new operations back home. It’s even possible that your next computer will be made in America. Last month, Apple CEO Tim Cook said the company will start making one of its new computer lines in California. “There are skills associated with manufacturing which have left the U.S.,” he told NBC, and he wants to see “a concerted effort” to get them back.
Conventional wisdom says the sun is setting on America’s reign as the world’s only superpower. Maybe so. But this sun will be setting for a long, long time. U.S. economic and military power remain unparalleled. It has the most inventive, entrepreneurial and open culture the world has ever seen, with the greatest concentrations of research and brainpower. It has the ability to recruit the best talent from around the globe. Sure, it has problems. But who doesn’t Would you rather put your bet on Europe? Or China, whose ruling class of kleptocrats and their spoiled Ferrari-driving offspring are facing a combustible mix of labor and peasant revolts on top of a demographic crisis? No thanks.
Last month, the U.S. National Intelligence Council painted a picture of the global mega-trends that will shape the world between now and 2030. These include food, resource and water shortages, and wrenching technological change. But the answer to the question “Is America finished?” is a resounding No. Although the U.S. will have to share the power, it will remain “first among equals” for years to come. “No other power would be likely to achieve the same panoply of power in this time frame under any plausible scenario.”
America is much more than the sum of its cartoonish politics – luckily for Americans, and for us.
US Tariff Bill To Cut Manufacturers' Costs
by MAM TeamTax-News.com
January 3, 2013
The package includes provisions from more than 2,000 bills introduced in the House and Senate during the Miscellaneous Tariff Bill (MTB) process. By eliminating tariffs on selected items until December 31, 2015, it hopes to provide temporary tax relief “to help US manufacturers better compete, expand, and create jobs.”
The MTB is a bipartisan, bicameral process developed over nearly 30 years. On March 30, the Ways and Means Committee and the Senate Finance Committee simultaneously commenced the 112th Congress MTB process and invited Congressional members to introduce temporary miscellaneous tariff bills for consideration and inclusion in the MTB legislation.
It was required that each bill would be non-controversial. If a domestic manufacturer or member objected to a bill, it was eliminated. The bills were scored by the Congressional Budget Office (CBO) and were each required to cost under USD500,000 per year. As a consequence, nearly 170 House members and Senators submitted more than 2,000 single bills to be considered through the process, which were then compiled into a single MTB.
Commenting on the legislation Camp said: “This legislation reflects a transparent, bipartisan effort to lower costs for US manufacturers. The bill has broad support, and it has received extensive public comment.”
Levin added that “the MTB helps make US manufacturers more competitive in the global market by reducing input costs. This bill has undergone an extensive vetting process with input from the administration, the International Trade Commission and the public.”
Brady said that “suspending duties temporarily on products such as manufacturing inputs is an essential step in helping to make US manufacturers more competitive and creating US jobs,” while McDermott hoped that the “bipartisan action on this trade bill is a harbinger of things to come on the trade agenda in 2013.”
The National Association of Manufacturers has already pointed out that all existing duty suspensions on over 600 products expired on December 31, 2012. It said that “passage of a new MTB is vital to avoid the re-imposition of import taxes on manufacturing inputs unavailable in the US,” and that “without a new MTB, US manufacturers will have to pay new taxes on these essential inputs, further adding to the cost of manufacturing in America.”
Promoting Made in U.S.A., But Very Carefully
by MAM TeamDecember 2012
But many companies are stepping gingerly, avoiding sweeping claims and spelling out what “Made in the U.S.A.” means for their products. Consumers are more shrewd about how few consumer goods actually are made in the United States, leaving companies less wiggle room about the origin of products.
The Whirlpool Corporation, for example, specified in full-page print advertisements this year that 80 percent of its appliances “sold in the U.S. come from our U.S. factories.” Despite its deep American roots, the 101-year-old company — which makes Maytag, Amana, KitchenAid and Jenn-Air products — has, like other corporate giants, moved some manufacturing abroad.
As a result of its centennial celebrations last year, some consumers have urged the company to talk more about its American origins, said William Beck, a senior marketing director at Whirlpool, which spent $57.4 million in 2011 on advertising, according to Kantar Media, a WPP unit.
In recent months, the appliance giant has been underlining its American factories, and noting in its overall brand advertising that it employs about 22,000 workers (15,000 of them at its manufacturing plants), and spends $7.4 billion annually on operating and maintaining its factories in Iowa, Ohio, Oklahoma and Tennessee.
But Whirlpool, whose ad drew a full-page rebuttal from the International Association of Machinists and Aerospace Workers accusing it of shutting factories in the United States, said nostalgia and similar sentiments do not drive its sales. “Whirlpool’s key differentiating points are quality and innovation,” said Mr. Beck, and “the icing is that, hey, we’re made in the United States.”
Whirlpool does not share its market research, but other market studies show that customers increasingly take note of where a product is made. Perception Research Services International, in a September study, found that four out of five shoppers notice a “Made in the U.S.A.” label on packaging, and 76 percent of them said they would be more likely to buy a product because of the label.
While shoppers, especially those over 35, say they want to help the economy by buying United States-made goods, “the motivating factors actually may be quality and safety,” said Jonathan Asher, executive vice president of Perception Research Services. The company, which is based in Teaneck, N.J., surveyed 1,400 consumers last summer. “People are paying attention in categories that are ingested like food, medicine and personal care products, but less so in electronics, office supplies and appliances,” he said.
In a separate study, the Boston Consulting Group found that 80 percent of consumers surveyed said they would be willing to pay more for “Made in the U.S.A.” products than for those carrying a “Made in China” label.
They would pay the biggest differential for items like baby food and wooden toys, and a smaller percentage for electronics, apparel and appliances, said Kate Manfred, director of the group’s Center for Consumer and Customer Insight in the Americas, which released the study in mid-November.
“Safety and quality, and keeping jobs in America, are the important factors,” she said.
Bixbi, a Boulder, Colo., pet treat provider, has relied on safety to increase sales. The company, which started in 2008 amid revelations of tainted dog food ingredients imported from overseas, sells dog treats made from locally raised chickens and other animals.
“Our sales have grown 600 percent each year,” said James Crouch, who founded the small company with his brother, Michael. “Locally sourced is a key advantage.”
But for all the talk about American-made goods, Bixbi is one of the few clients that have adopted “Made in the U.S.A.” marketing, said Dave Schiff, co-founder of Made Movement, a Boulder advertising firm that handles the Bixbi account.
“Some customers think that the American-made label may just be window dressing and companies can be reluctant to use it,” Mr. Schiff said. He and two colleagues started their firm in April to enlist client companies that manufacture in the United States.
Classifying goods as American-made can be dicey, he discovered, because many products have parts that are made outside the United States. To generate interest in such products, as well as a revenue stream, his firm in July started a Made Collection Web site to sell American-made goods.
But finding goods manufactured in the United States for the Web site has been a challenge, Mr. Schiff said. Many items on the Web site are expensive, like a $225 dress shirt from Hamilton, the Houston company that makes Made in America apparel that competes with brands like Levi’s Vintage Clothing and Orvis, which also capitalize on manufacturing in the United States.
Companies are keenly aware that highlighting American-made credentials can backfire after the experience of the apparel maker Ralph Lauren. Renowned for its American nostalgia, Lauren provided uniforms for the 2012 United States Olympic team that were made in China. That resulted in threats of a boycott by some angry consumers.
Some companies like Exxel Outdoors, which makes camping, hunting and fishing equipment, have considered, then rejected, marketing their American-made credentials. Exxel makes two million sleeping bags annually at its Haleyville, Ala., factory.
“We do manufacture in the United States, but there are a lot of variables, like where the components are made. Some of ours come from abroad, so it could be confusing,” Harry Kazazian, the company’s chief executive, explained.
“Simply using the Made in the U.S.A. label is not enough,” said Jaynie L. Smith, chief executive of Smart Advantage, a consulting firm based in Fort Lauderdale, Fla.
“Companies can be foreign owned,” said Ms. Smith, who wrote “Relevant Selling,” a book about corporate sales strategy. “But they need to say that ‘We are still on your soil. We create jobs. We make quality products, and we’re delivering them quickly.’ ”
An Eyes Wide Open Look at U.S. Manufacturing
by MAM TeamCo-author, ‘Death by China’
Senior Economist, American Jobs Alliance
December 31, 2012
As the quote above illustrates, her arguments fly in the face of the current U.S. business school paradigm which seems to be: Leverage America’s R&D and capital to create great consumer products, manufactured abroad — usually China — in order to maximize shareholder return. In this mindset capital is not king, but God, bearing no allegiance to any nation, community, firm or employee. As academics, we teach our business leaders: The fate of individuals is not your concern — unless they are CEOs or stockholders — as competing with third-world wages and standards will actually do them good. In this curriculum the only thing that matters is getting the biggest number on the left side of the equation next quarter, even if the ironic long-term consequences of this short term thinking may be the subjugation of the capitalist system that created it to a foreign and avowedly communist regime.
Let me be clear that Can American Manufacturing Be Saved? is no emotional, xenophobic rant against trade. Nash-Hoff views trade as a tough playing field that Americans used to rule and can win on again. The book starts with a gritty history of U.S. manufacturing and its associated politics. It accepts no sacred cows as it turns over all the rocks and exposes the good, bad and ugly in four centuries of American industry, unions, and politicians. The author happily skewers the intransigent labor leaders, complicit managers, and naïve politicians of the last century who guided American manufacturing into a period of ludicrous union contracts and built our Kafkaesque regulatory environment.
That said, Nash-Hoff is quick to remind cynics that just because the pendulum may have swung too far, it doesn’t mean that we want to be living in the 19th century again either:
Lessons Learned From 100% Made in USA House
by MAM TeamDecember 27, 2012
Now, about a month from completion, the three-bedroom house on the Conway Chain of Lakes stands as a pioneering lesson in the challenges, costs and limitations of building a made-in-America house. The couple have cataloged their construction story at buildtheusa.us.
Two rules were imposed on the job: All products had to be made in the U.S., though not necessarily by a U.S. company. And all workers had to be legal residents of the country. The point, the Gents said, was to support jobs in the U.S.
In some cases, the workers were employed by companies with plants on American soil but with global headquarters elsewhere; it is a mistake, Greg Gent said, to assume that a U.S. company manufactures all its products in the States, or that companies marketing their U.S. presence actually manufacture their wares domestically.
“We started checking all the products, and then [contractor] John [Carr] did, and then John got the subs to,” he said. “No one tried to sneak anything by.”
The ashen porcelain tiles that cover the floors throughout the two-story house were made in the United States, though the supplier is a subsidiary of Italy’s Florim Ceramiche SpA. The shingles were similarly manufactured in the U.S. by a business owned by a French corporation.
Carr, president of Belle Isle-based JPC Construction Inc., said the biggest challenge was finding legal workers in a market abandoned by many crews after the housing slump started five or six years ago. An increase in production-home construction during the past year has left skilled workers in high demand, he added.
Difficulties finding the right workers, plus rain delays, added at least three weeks to the job. And ensuring the house was built with U.S. products, materials and labor added several more weeks.
Subcontractors were dutiful about the made-in-America mission. Carr said his father-in-law, Russ Willis, did the electrical work in the house and discovered a low-voltage surge-protector box marked “Made in the USA” that, upon closer inspection, had components within it from Canada and Mexico as well as the U.S.
Part of the home’s soffits were manufactured by a company that had just started purchasing its supplies from China, so an earlier product batch built in the U.S. had to be tracked down and used.
Carr, who used his cellphone camera to document where products had been manufactured, estimated that the additional cost of wrapping the house in a virtual American flag was about $2,500 to $3,000, or about 1 percent of the overall cost of construction. Two of the project’s seemingly least-expensive items — screws and nails — were responsible for driving much of that higher tab, because they cost about four times as much as their foreign-made versions.
“I’d like to change to do this entirely” with other houses, the contractor said. “But you’ve got the competition. My clients now say they’d like to do this, but there’s the cost.”
Greg Gent is able to recite the origins of almost every part and product used in building the house, from the suppliers of sand and limestone in Lake Wales to the cement company in Sumterville. The item he is most excited about, however, is the Pawleys Island handcrafted rope hammock from South Carolina.
Unable to find a ceiling fan manufactured on U.S. soil, he said he and his wife are holding off on ordering any. Maybe someone in this country will start manufacturing them again, he said.
Apple to Move Mac Mini Production to America: Report
by MAM TeamDecember 27, 2012
A report from the Taiwanese tech publication DigiTimes, quoting sources in the upstream supply chain, said Apple is set to move its Mac Mini production lines back to the U.S. “Currently, Foxconn has about 15 operating bases in the U.S., and the company reportedly plans to start recruiting workers in 2013 for new automated production lines,” the report said.
Foxconn, the Taiwanese manufacturing company that makes the iPhone handset, among other Apple components, would be responsible for handling the establishment of production, DigiTimes reported. The Mac Mini offers third-generation Intel Core processors, an integrated memory controller that connects 1,600MHz memory directly to the processor, Intel HD Graphics 4000, either a 500GB or 1TB 5,400rpm hard drive and up to 256GB of flash storage in a solid-state drive instead of a traditional hard drive.
According to a DigiTimes research report, Apple’s Mac Mini shipments are projected to rise 30 percent to 1.8 million units in 2013, up from 1.4 million units in 2012. Apple upgraded the Mac Mini in October, which now includes four USB 3.0 ports in addition to its Thunderbolt, High Definition Multimedia Interface (HDMI), Secure Digital Extended Capacity (SDXC), Gigabit Ethernet and FireWire 800 ports.
The Mac Mini is available with a 2.5GHz dual-core Intel Core i5 with Turbo Boost speeds up to 3.1GHz, 4GB of memory and a 500GB hard drive for $599; a 2.3GHz quad-core Intel Core i7 with Turbo Boost speeds up to 3.3GHz, 4GB of memory and a 1TB hard drive for $799; and a 2.3GHz quad-core Intel Core i7 with Turbo Boost speeds up to 3.3GHz, OS X Server, 4GB of memory and two 1TB hard drives for $999.
Earlier this month, Apple CEO Tim Cook told NBC news anchor Brian Williams that Apple will, in fact, be moving the production of one of its Mac lines to America, a move that will cost the company approximately $100 million.
In the interview, Cook’s first since he took the helm as CEO in mid-2011, he also said the company plans to build a data center in Texas, in addition to existing data centers in North Carolina, Nevada and Oregon. Cook declined to state specifically where the computers would be made, however.
“We’ve been working for years on doing more and more in the United States,” Cook told Williams. “When you back up and look at Apple’s effect on job creation in the United States, we estimate that we’ve created more than 600,000 jobs now.”
What Mac to be 'Made in USA'? Maybe Mini, perhaps Pro?
by MAM TeamDecember 26, 2012
Elmer-Dewitt notes that Cook mentioned a $100 million investment and that a Bloomberg source, Dan Luria, estimated that such a sum would add up to a factory employing about 200 workers and turning out about a million units of whatever product per year. (Luria studies factory operations as a labor economist at Michigan Manufacturing Technology Center in Plymouth, Mich.)
“Only the Mac Pro and Mini sell fewer than 1 million per year,” Elmer-Dewitt says. And here’s why he casts his lot with the Pro: It’s heavier than the Mini, and thus more expensive to ship from overseas; Pros are, he says, “easier to build and customize than any other Apple product;” and Cook has indicated that Apple will be making a new Pro in the coming year.
So which Mac will bear the “Made In USA” label? That, of course, remains to be seen. It’s interesting, though, to play armchair CEO/COO and begin pondering such logistical questions.
Manufacturing “Insourcing” to Gather Steam in 2013
by MAM TeamIn the wake of the BP drilling rig failure in the Gulf of Mexico almost 18 months ago, costing untold billions of dollars in penalties and losses, this unfortunate incident has added to the importance of “ultimate responsibility” by the “front line” installer and ultimate user.
Added to these changing circumstances are both escalating and time consuming overseas transportation costs, plus the shrinking of direct labor costs that have actually dropped in the U.S., but quintupled in China during the last 10 years. In the case of high technology, the imbalance has even grown tighter as the cost of labor in finished goods have continued to be less important as part of the total price picture.
But what surprised me most in the Atlantic Monthly article is the fact that GE, universally derided as the “champion of outsourcing,” has taken a leadership role in reopening production facilities in the U.S.
Although dismissed by some as a public relations gesture, due to CEO Jeff Immelt’s previous collaboration as the White House chief of non-existing domestic job creation, the GE “insourcing turnaround is primarily due to the rapid need for constant product innovation, and the shift to “just-in-time” inventory control. This is made almost impossible by today’s multi-month delivery time and the volume of purchases necessary from abroad to achieve a satisfactory cost preference. Other major American multi-nationals are indicating a similar predisposition.
When viewing America’s 2013 domestic production expansion through the prism of “insourcing” rapidity, trade deficit shrinkage. and setting new export records, especially in energy, heavy machinery, military equipment, technology and agriculture, guarded optimism has entered the picture. But it still leaves in doubt economic direction, so heavily colored with questionable politico-economic leadership emanating from Washington, D.C.
Is Manufacturing Making A Comeback In The U.S.?
by MAM TeamAs a whole, the sector is looking up. The Institute for Supply Management’s PMI (Purchasing Manager’s Index — an indicator of manufacturing health) showed positive growth in October for the second straight month as orders increased, production improved, and export demand remained static.
Hidden within those statistics are two curious and surprising success stories.
Automotive manufacturing, once a crucial tentpole in America’s industrial economy, is poised for a surprising (if slow) comeback. Industry analysts are cautiously optimistic about the sector after stronger year-to-date sales, healthier inventory levels, more favorable credit conditions and improved consumer sentiment have boosted demand for American light-vehicle manufacturing.
Chrysler capped off its best October in five years, with sales rising 10% despite the three-day disruption of Hurricane Sandy. (Ford, for example, despite estimating that the storm cost the industry 20,000 to 25,000 sales, reported a small sales increase.) With gas prices declining and consumer sentiment rising, experts expect automotive manufacturers to experience gains into 2013.
The second and even more surprising growth sector is computer and electronics manufacturing. Apple recently announced plans to invest $100 million in building more of its Mac computer components in the United States. Chinese PC giant Lenovo announced in October that it would break ground on a manufacturing center in North Carolina. The facility, Lenovo said, “will be capable of turning out some of Lenovo’s newest and most innovative products, such as the recently announced ThinkCentre M92p Tiny desktop and ThinkPad Tablet 2.”
The facility is expected to create only 115 jobs initially, a tiny fraction of the 2.7 million manufacturing jobs the U.S. has lost to China in the last 10 years alone. But it’s a start. Reasons to shift manufacturing back to the U.S. are many; the “landed cost” — the cost of moving goods from factories to their destination — is rising owing to increasingly expensive fuel and logistics needs. Also rising is the cost of Chinese labor. While still low by Western standards, wages are creeping up in China as they fall stateside.
Both changes are too new and too undeveloped for a pronouncement of recovery just yet, but the attendant factors — increased cost of shipping, rising foreign labor costs, falling wages at home and growing consumer demand — give prognosticators every reason to be cautiously optimistic. Though a victory lap may be premature, it’s possible these could be the first signs of a return to the American industrial economy of decades past.