Bringing Manufacturing Back to the U.S.

By June 23, 2008Economy, Trade

Interesting discussion on CNBC today featuring David Rocks of BusinessWeek and David Huether, the NAM’s chief economist. Issue at hand: Whether high energy costs, i.e., shipping costs, will encourage some manufacturers to locate more facilities in the United States rather than overseas (e.g., China).

Huether reports that import prices are rising and investment in manufacturing structures is strong, so the trend is discernible. Rocks sounds a bit more skeptical, saying that much of U.S. manufacturing capacity has gone overseas, and labor-intensive manufacturing is certainly not going to return.

You can watch the interview here.

The impetus for this segment is BusinessWeek’s latest cover story:

Can the U.S. Bring Jobs Back from China?

Pricey oil is dulling the mainland’s edge in manufacturing. But American industry may not be ready to seize the opportunity

Join the discussion 2 Comments

  • […] the flip side, as previously noted, BusinessWeek reporting, “Can the U.S. Bring Jobs Back from […]

  • S Taylor says:


    Having worked in manufacturing and knowing intimately the extent to which consumer demands place on the manufacturer and therefore, manufacturers on their suppliers and so on, I would venture to say that manufacturing will begin moving back faster to the U.S.

    In this “I want it yesterday” climate, consumers have absolutely no problem whatsoever in going elsewhere and paying more to get what they want when they want it. It is no longer about product loyalty. The ‘Just in Time’ manufacturing model as part of improved quality that companies strived to achieve way back when, was a result of controlling this consumer-driven behavior and improving customer retention. Back then, production records were broken; hence bragging rights were claimed right down to the production floor personnel.

    If a business customer wanted delivery ‘next week’ because they received an unforeseen high volume order and it was deemed a high priority, all of the departments would work together including overtime, paid extra or not, to revise the production schedule. Raw materials were trucked-in using a tag team, if necessary; the lab was literally ‘waiting’ for the samples to arrive; the lab techs worked overtime until…; the raw material was off-loaded directly into the processing tanks instead of into the storage tank in the tank farm; and the customer received their delivery maybe even a day early! WOW, was that a lot of hard work, but it got done and the customer was happy and they stayed with us!

    Given that environment, the morale was quite high. The workers would really ‘walk a mile for a Camel’ for this type of self-esteem payoff. They knew their efforts paid off. It felt good in the end — maybe not always in the getting there, but eventually, when the job was done. We were groomed into that consumer-driven work ethic and culture.

    To top it all off, companies used to brag to their competitors and customers that they could deliver products faster and better than anyone else. Owning those bragging rights was ‘king’ and was even used by that company’s marketing and advertising departments for TV, print, and radio advertising. Some advertising spots were really funny, yet effective.

    The cost benefits were then passed onto the consumer, as practical, since there was minimal excess inventory built-up and minimal off-spec components produced. Our environmental and recycling programs were effective as we tried very hard to be ‘good neighbors’ to the surrounding communities.

    Everyone from management down to the production floor personnel was so happy when it all came together and targets were met. When upper management was elated, our Christmas parties and company picnics were exceptionally GREAT – those were the days… :) We would be proud to brag that we worked for company A, B or C and would bend over backwards to make the company look good.

    Now since then, ‘9-11’ happened; the West coast Port Authority went on strike for weeks and nothing moved; Customs increased approval time of incoming shipments because of 9-11; our government is increasing various costs associated with product imports which includes paying more for Homeland Security; each time when it becomes a political hot-button issue during certain election periods to say that Homeland Security is not inspecting enough of those containers, it again forces Homeland Security to increase their costs due to added inspectors, etc. which again gets passed onto imported products; our off-shore partners in manufacturing are receiving mandates from their government to upgrade and improve their air quality and working conditions which will add A LOT more to production costs and downtime in the future; …and you know the rest.

    There is absolutely NO WAY for any company producing outside of the U.S. to REALLY control product pricing and guarantee delivery time without producing and warehousing more product than is realistically needed or able to be sold within a given time period. That’s a hard enough job trying to accurately forecast production requirements and control pricing when produced in the States. If we conducted business like that again in the States today, we would really be heading backwards – before the days of ‘JIT.’ Then we would have to have more meetings (yuck) to discuss how to create a JIT system. Go figure!

    Right now, there is just too much uncontrollable variability and uncertainty in off-shore manufacturing, in my opinion, although I want to believe it is a more profitable business model. It will eventually cost way too much to try to control this potential ‘runaway’ process. And, let’s not introduce ‘oil’ into this scenario. The sleepless nights due to the large difference in time zones in trying to control a runaway process will eventually make many feel like George Jetson asking Jane to “stop this crazy thing!” And how will product pricing be affected when these high-salaried professionals and support staff spend a significant amount of their time in reaction mode when this happens? How long would it take to get it under control? Will it ever become in-control?

    For those who finally accept the depth of this uncontrolled variability that is lurking in the not-to-distant future and decide to move their production back here before customers begin rebelling, all I can say is, “you have your work cut out for you.” For companies who have a U.S. manufacturing infrastructure to meet product demands when all of this hits the fan, especially if the off-shore manufacturers have to shut down their plants for those potentially lengthy upgrades and approvals, I say, “get ready and enjoy the ride.”

    Think back and remember how much time, human resources, financial investment, equipment installation and testing, training, environmental services analyses, storm water analysis, procedure writing, more testing, more meetings, etc. it took for U.S. manufacturers to conform to our government’s mandates. Do you think off-shore folks move that quickly? Who knows, even with that country’s downtime and uncertainties, for some companies, it still may prove economically feasible.


    So, what are a lot of those workers that became casualties of the transformation of our manufacturing system doing now? They’re trying to figure out how to become successful business owners. They even have a place to obtain assistance from other entrepreneurs for free. Some of those entrepreneurs need manufacturers for their product. Many are looking for domestic manufacturers. Maybe this will open up new markets for the domestic manufacturing industry — who knows. Check it out. You can reach it either this way ( or through here (


    Good luck manufacturers and entrepreneurs!!!

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