Bringing manufacturing back to America
For a growing number of American companies, offshoring manufacturing work is becoming less of a benefit for business. so they're bringing them back to the U.S. The practice is called "reshoring" or "insourcing." More companies are finding a better deal keeping jobs close to home.
According to a Boston Consulting Group report, five million manufacturing jobs could be created in the United States by the end of the decade as the country is fast becoming the lowest-cost producer in the developed world. Many of these jobs will come from European countries and Japan as the U.S. is expected to have a cost advantage of up to 25 percent by 2015 over Germany, Italy, France, the United Kingdom and Japan.
Josh Whitford, sociology professor at Columbia University, joined The Daily Circuit Tuesday. He said there were a number of factors working against American manufacturing employees in recent years. Increases in productivity led to fewer people needed to make the same products, and offshoring played a role.
"One big one is simply a decline in demand," he said. "If people aren't buying things, they hire less people. As there's finally some recovery and some pent-up demand, you're seeing some new hiring and investment in companies."
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Dave Murphy, president of Red Wing Shoes in Red Wing, Minn., said a vast majority of his products are made in America. When production is moved, Murphy said quality control, availability of skilled labor and control over development play a factor.
"As we look at bringing product back, it will make a difference in jobs today," he said. "Were they here a decade ago? Probably yes they were."
If more Americans demand items that are made in the U.S., it will drive production back, Murphy said.
"There's no question that if there was a continued and stronger desire by consumers to buy American, it would impact our employment, it would impact our economy in a significant way," he said.
Kathy, a caller from East Bethel, Minn., said her husband dealt with the troubles of quality control and offshoring. He was a journeyman tool and die maker when his company moved some manufacturing abroad.
"The stuff would come back and it wouldn't be done properly and they'd have to redo it all," she said.
For many employers, cost plays a major role in offshoring decisions.
According to the Boston Consulting Group report, "a combination of economic forces is fast eroding China's cost advantage as an export platform for the North American market. Meanwhile, the U.S., with an increasingly flexible workforce and a resilient corporate sector, is becoming more attractive as a place to manufacture many goods consumed on this continent."
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