Manufacturing work seems to be returning to the United States. Is it returning in a big way? I want it to be so.
In an article for our e-newsletter, MMS Extra, I wrote about two sources that see the work returning. One is a consulting firm whose survey of OEMs found that most of them are re-evaluating domestic production because of the unplanned costs of manufacturing at a distance. Another is a maker of custom workholding that is seeing new business specifically because of companies tooling up to take on work that is returning home. Read more about both views in the article under "Editor Picks" at right.
When I hear this news of “on-shoring,” I am hopeful—hopeful enough that I know I should regard the news with skepticism.
The entire view of offshore manufacturing gets pulled between analysis and emotion. Where foreign outsourcing truly makes sense, let it be. The market should sort out the most cost-effective source for almost any production. In many instances, though, one suspects it really doesn’t make sense—that the work was sent away in haste, without taking all the factors into account. Couple this with the emotion we feel whether the offshoring makes sense or not. Making useful products is one of the best services people and companies perform, and many of us want to see Americans doing this.
In this mix of logic and feeling, it can be hard to measure just how much evidence is enough to ratify the belief that the shift to foreign sourcing was overdone. I don’t want to be led astray by my own bias, so while I keep seeking the evidence hopefully, I am also inclined to judge it with a critical eye.
But what if the very search for this evidence misses the point?
As I was reminded in a recent Business Week article (find a link at in the same article at right), the United States remains the world’s leading manufacturer by a healthy margin. In 2007, the value of U.S. manufacturing output was 2.5 times that of China and 2 times what the United States produced just 10 years earlier. Plus, “made in USA” remains a synonym for quality worldwide.
It’s just that consumer products generally do not wear this label now, and consumer products are what consumers see. Those who lament the decline of U.S. manufacturing often simply aren’t shopping for aircraft technology, power generation machinery or medical equipment. The emotion of offshoring thus includes this element as well: the temptation to exaggerate its impact.
Is work coming back to the United States? The skeptic fears that only a small amount is returning. However, even a small amount might be a testament. There can be no big comeback unless there was a big loss—and American manufacturing has busied itself at higher levels of value. That means the work that does return represents an addition to the already high output, as U.S. manufacturing grows further to take on the work whose full value was appreciated only after it was sent away.
Editor PickSecond Thoughts On Foreign Sourcing
Will a returning tide lift U.S. manufacturing? One consulting firm says companies are reevaluating their sourcing strategies with an eye toward more domestic production. A company that serves domestic machining facilities clearly sees the same trend.