The Atlantic: manufacturing coming back to the USA

The Atlantic (Dec 2012) has featured two articles on the return of manufacturing back to the USA. What may be of interest is that perhaps it should never have left:

“[Harry Moser, MIT-trained engineer] believes that about a quarter of what’s made outside the US could be more profitably made at home… about 60% of the companies that offshored manufacturing didn’t really do the math. They looked only at the labor rate–they didn’t look at the hidden costs.”mag-article-large

“There was a herd mentality to the offshoring… It was the inability to see the total costs–the engineers in the US and factory managers in China who can’t talk to each other; the management hours and money flying to Asia to find out why they quality they wanted wasn’t being delivered. The cost of all that is huge.”

“All you need is to have to hire one or two 747s a couple of times to get product here in a hurry and you lose those savings.”

On the savings of outsourcing, these stories are common: “I had five finance guys working on it, and they couldn’t come up with any savings.”

The story weaves around the renaissance of GE’s Appliance park in Kentucky, which used to employ 23,000 in 1973, but reached a low of 1,863 in 2011. Now it’s 90% higher, and growing. Soon, GE could be looking at 75% of its appliance business’s revenue to come from American-made products.

And it’s not just manufacturing jobs that will be created by manufacturing. Big factories have a “multiplier effect,” meaning their sphere of influence leads to other businesses coming in and opening shop, as well as to the need to hire engineers and designers here at home.

The articles:

Charles Fishman, “The Insourcing Boom”

James Fallows, “Mr. China Comes to America”

*picture is from the Atlantic

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