Shifts in American Manufacturing

Since the recession, the United States has slowly but surely been making a comeback to the manufacturing sector. Over the past year or two, China has been increasing their labor wages, causing many US companies to return their manufacturing to the states. Together with the increasing wages and the rising costs of shipping and transportation, sourcing in China has now become a burden for many US companies. Intellectual property has also become a source of concern when sending new products to be manufactured overseas who do not comply with the same type of intellectual ownership laws. Places like China are using other countries intellectual property to recreate the product elsewhere and sell it as their own. This has definitely become a huge burden for some American companies. In addition, over recent years the US has increased productivity in creating businesses and trying to maintain a steady economy. Not to mention the value of the US dollar has slowly diminished, which is also a burden to many US companies who invest overseas. Together, the US is beginning to see a shift in where their manufacturing dollars are going. Companies are beginning to rethink their supply chain management and how they can leverage local resources to bring their business back to the states.

What will be interesting is to see if the US government will take advantage of this trend. Of course, there will be some manufacturing that will always take place overseas due to skill levels. This is where the US can turn itself around as far as manufacturing goes and begin to bring those skills back to the US. Nowadays, schools base their skills on high technology and innovation. We really don’t see mechanical and labor education / jobs like we did 50 years ago. Now, many of those mechanical and labor jobs are the ones being sent overseas. The US needs to remember that these jobs are still viable and important in keeping our businesses flourishing and keeping dollars here in the US to keep the economy steady.

Schools would be the first step in teaching those skills to students to prepare them for jobs that require that type of skill set. Manufacturers would then be able to hire skilled labor and keep those jobs here. In addition, the US government would need to give incentives for companies to hire more workforce to keep unemployment low, to be able to upgrade their factories with new technology, and to provide training for new skills. This would allow American companies to be competitive on all manufacturing fronts. By having a strong manufacturing industry in the US, not only would the manufacturing dollars be recirculated in the US economy, more people would have jobs which would allow them to have wealth to recirculate throughout the economy. Eventually, this would snowball by creating new industries, businesses, and more jobs.

Here at VIP, we have seen several companies come to us for their metal fabrication needs who are looking to re-shore their product. Although we see these companies testing US suppliers, we have yet to see a major change in companies who are looking to re-shoring. It is clear that many companies are reconsidering and definitely looking at their options to see if it is feasible for them to bring their product here. We of course see all the affects of companies who do take their manufacturing overseas, and encourage US companies to bring their business back to the states. Although the American cost to manufacture can be higher than overseas, it has many other benefits that outweigh the costs of doing business in places like China and Bangladesh. For instance, doing business in the states means better communication, quicker lead times, lower transportation costs, more confidentiality between companies, and better control over quality.

If you are a company who is currently having products made overseas and are looking to bring your product back domestically, we hope that you will keep us in mind for your fabrication needs. Contact us for a quote!

 

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