While few good things have happened to the U.S. manufacturing industry in recent decades, that could be subject to change. China, the go-to place for manufacturing for some time now, is undergoing some changes that may take the gloss off “made in China”. For starters, labor costs are skyrocketing, as manufacturing saturates the country and the issues of work conditions – largely ignored before – come to attention. (Witness the scandals with Foxconn, Apple's (News - Alert) manufacturer.) Secondly, even if manufacturing on foreign shores saves money, the costs of shipping are steadily rising, thanks to rising fuel costs, environmental regulations, and the risk of piracy in international waters.
So what does this mean? It means that we might start to see some manufacturing come back to U.S. shores. It might even be outsourced from China, noted Business 21 this week.
There are a number of factors at play, including the streamlining of American manufacturing processes for better efficiency. Boston Consulting Group's managing director, Hal Sirkin told Business 21 that today, the U.S. produces two and a half times more quantity than it did in 1972 – but with 30 percent less labor. What does this mean? It means that while technology processes and automation have gotten better, production has become leaner. With skyrocketing labor costs in China, rising costs of international shipping, along with the costs of fuel, it suddenly makes sense to manufacture in the U.S. once again. Even with increases in wages in the U.S. it may still cost less to manufacture on American shores than to do it in China.
Many Chinese conglomerates are now choosing to set up manufacturing facilities on U.S. shores. It helps them eliminate “anti-dumping tariffs”, according to Business 21. The U.S. imposes these tariffs on imported products that it believes are being sold cheaper than the cost it takes to produce them. Dumping creates an unfair advantage in the marketplace, according to the U.S. Department of Commerce.
Americans are becoming more wary of “Made in China” labels, either it because of patriotism, anger at the weak economy or simply because of issues of quality. While the manufacturer may still be located in China, the widgets, increasingly, are being put together on U.S. shores.
Edited by Brooke Neuman