Why is Manufacturing Returning to the United States?

There are many factors that weigh into this question. Why is this occurring? Is it decreases in the cost of labor? Is it just skilled US manufacturing? Supply chain? What we do know is that U.S. companies that once operated abroad are now shifting their operations to the United States. This list of companies include some big powerhouses: GE, Walmart, Ford, Honda and Apple. Is this a growing trend, or are products like Apple’s Mac Pro an anomaly?

In the near future, U.S. consumers could see more and more products labeled “Made in the USA” on store shelves. As labor rates in China increase and manufacturers discover unforeseen challenges at overseas’ manufacturing facilities, many companies are thinking of the advantages of keeping their operations in the U.S. Whereas the gap in labor costs between the U.S. and China was about $17 per hour in 2006, that could decrease to $7 per hour by 2015. Besides the shrinking wage gap between China and the United States, the productivity of the American worker continues to rise. Also, shipping costs are rising, making outsourcing even more costly.

Apple planned to spend $100 million on manufacturing for 2013. Apple has made the move to producing of one of its Mac lines to the U.S. Cook, Apple’s CEO noted that certain iPhone components, like its glass screen, are already made in the U.S. and shipped abroad for assembly, stated in an article shared by informationWeek.

Thirty-two years of Honda manufacturing in the US, which started with manufacturing just motorcycles and then changed to cars in the early 1980’s is now operating five auto plants in the U.S. Annually, purchasing more than $17.6 billion in parts and materials from U.S. suppliers. Discussions that cars were assembled in the U.S. but key components such as the transmission and engine were shipped from Japan are incorrect. In 2013, nearly 95 percent of the Honda Acura that were sold in the U.S. were produced in North America.

Wal-Mart’s new slogan “Investing in American Jobs” is to invest $250 billion over the next ten years that support American jobs. They plan on accomplishing this by increasing what they already buy of U.S. manufactured goods, source “new to Walmart” U.S. manufactured goods, and re-shore the manufacturing of goods they currently buy by facilitating and accelerating efforts of their suppliers. Industry experts refer to the resulting manufacturing move from China back to the United States as “reshoring.”

This list of companies manufacturing in the USA continues to grow as labor rates in China grow, shipping costs increase and the productivity of the U.S. worker grows. Is manufacturing returning to the United States? The answer is yes. Will manufacturing jobs in the U.S. return to levels we saw 30 years ago? No, but the fact we are seeing more and more companies invest in America is a good sign for the future. Here at Atlantic Precision Spring, Inc. we know first hand the productivity and quality the U.S. can deliver. Our company was founded in 1958 on the premise that quality products, exceptional customer service and competitive pricing are the foundations for a successful business. Located in Bristol Connecticut, we have been manufacturing metal stampings and electrical contacts with precision equipment and well trained employees for over 50 years. Contact us to learn more about our company and the services we provide.

Posted in Manufacturing