Is Manufacturing "Reshoring" from China back to the United States?
Bloomberg Business Week recently published an article reporting that it is now just as economical to make goods in the United States as in China. Forbes hosted the Reinventing America Summit in Chicago, which brought together more than 300 industry leaders, entrepreneurs, investors and policy makers to discuss the rebirth of American manufacturing. Of course, both of these are off great interest to us, as they probably are for you too.
There are a variety of reasons of why we are now competing against China. They include:
- Rising costs of labor in China
- Improvement in American productivity
- Reduced energy costs in the U.S.
According to the Bloomberg article, these and other factors have made $1.00 in US manufacturing costs compare favorably to the $0.96 in Chinese manufacturing costs. When you consider transportation costs, quality, and patent rights, America looks favorable again.
The problem is that many manufacturers in the United States are using a playbook that is a decade or more old. We still have this vision that seeking an overseas supplier or building plants overseas will save us money. We are forgetting the guiding principle that purchases are still emotional, and selling value - “Made in the USA” - can help nourish that emotion. As it turns out, it is a practical decision as well.
Over the past ten years, both Mexico and the U.S. have made strides in competitive manufacturing costs while costs in countries like China, Brazil, Poland and Germany have risen significantly. This has changed the landscape across the globe but far too many, even in our own country, haven’t realized it yet. Things change, and they already have. Somehow we accept that we can carry a computer in our pockets with apps that can do almost anything, but we can’t grasp that America is competitive in manufacturing again.
Made In America
We are doing our part to make “Made in America” carry a message of quality, and it is a message we all need to help brand. At the Reinventing America Summit top executives from Wabash National, Walmart, Badger Meter and Emerson came together to talk about this very topic: Made In America, Inside the Next Manufacturing Revolution. These manufacturers are seeing regions reinvent themselves to keep jobs in their community as well as realizing that 'making goods closest to the point of consumption is good for business'.
Spread the Word
We hope you will spread the word and do what you can to bring manufacturing jobs back to the United States. It is an emotional message that your customers want to buy into.
It took time to lose many of these jobs and it will take time to get them back, but the realization that it is smart business to manufacture in the U.S. is as good as a place to start as any. Let’s keep things moving in a positive direction.
We are on the cusp of rebuilding our manufacturing base in this country and 21 Handshake client Wiley Metal, located in Indiana, is proud to be a part of that. We appreciate all our customers who are helping to make “Made in America” so meaningful again.