Outlook For US Manufacturing Sector Remains Positive.
In its lead story last night, ABC World News (6/29, lead story, 2:20, Stephanopoulos) reported, “It is the engine that could rev up our economy, manufacturing, making things right here in America. And today, a name we all grew up with, Mars Candy, announced plans to hire hundreds of workers and build a new quarter billion dollar factory, its first on American soil in decades. It’s part of a bigger picture, too; 173,000 manufacturing jobs created in the past 12 months. Manufacturing was growing much faster than the overall economy. .. And here’s more good news. One study has shown that by 2015, production costs in the US and China, incredibly, will be about the same for many products, which means more companies will be bringing more of these jobs home.”
More Companies Deciding To Reshore Manufacturing Operations. Fortune (6/30, Tseng) reports that “US manufacturing appears to be on the cusp of an awakening – if not a full rebirth,” and explores some of the reasons behind this trend. Among those noted in the article is the increased expense of manufacturing overseas, both in terms of wages and shipping costs, as well as the costliness of dealing with “weak links” in a global supply chain. At the same time, experts say, there are limits the trend’s benefits. For example, while the benefits of manufacturing in China for export purposes have decreased, the Chinese consumer base for many companies has also increased, and if the company is producing goods in China for the Chinese market “then they’re likely going to stay,” experts said. Additionally, with ever-increasing use of automation, “there are sizeable limits over how many more jobs re-shoring would create.”
Companies Explain Motivations Behind Reshoring Decisions. A similar article in CNNMoney (6/30, Prasso) reports on the prevalence of “a trend called reshoring, in which primarily small businesses decide that China is a hassle and that they want to bring their operations closer to home, where the recession has lowered costs, created workers eager for jobs, and made it easier to justify US manufacturing.” Increasingly, businesses both large and small are looking to “take advantage of local incentives and move back at least some of their manufacturing operations for products sold in the US market.” Companies who have made the decision say that, in addition to the other benefits, reshoring simplifies their operations, and decreases the amount of travel and quality control they need to do.
From SME Daily Executive Briefing 6.30.2011