Companies are rethinking their model for manufacturing. Many now firmly believe—and take some pride—in having products manufactured with the “Made in the USA” label attached. This isn’t so much a matter of national pride as it is a better, more profitable way of doing business.
While companies used to have components made in countries with extremely low labor cost, many are returning the work back to factories in the United States. There are many reasons for this phenomenon. However, the real drivers are the same ones that sent work overseas: cost and profit.
Low labor costs in foreign countries lured manufacturing business from U.S. factories at a time when transportation costs were low. Both of these factors are changing. For example, Duetsche Bank reports the wage of the average Chinese worker increased 200% since 2001. Furthermore, transportation costs have shot through the roof because of fuel costs stuck near record levels, an increase in red tape, taxes and fees.
Other factors like language, culture, runaway costs and a growing trend of political, economic and social unrest around the globe add to concern in boardrooms about the ability to deliver products in a timely manner. Additionally, we have seen many examples of natural disasters interrupting the supply chain. The 2011 earthquake in Japan was a prime example.
Finally, American workers and their factories continue to out-produce their counterparts around the world and remain among the leaders in productivity. Made in America not only helps our economy, it makes sound business sense.