For years, the story of American manufacturing has been one of shedding jobs to low-cost labor countries and boarding up manufacturing plants. To say the least, American manufacturing has taken a pummeling over the last couple of decades. But there are positive signs that U.S. manufacturing is headed for a comeback.
Lately, the topic of reshoring--the term used to describe manufacturers bringing production back to North American after offshoring--has been in the news quite a bit. There have been a couple of high-profile instances of companies such as GE leaving China to make their water heaters in Kentucky.
The fact that reshoring is in the news and is now being considered seriously by manufacturers is a good sign for the future of American manufacturing. Let's look at what's driving the trend of reshoring.
What's Causing Manufacturers to Reshore Production?
Before we can understand how to encourage more companies to come back to reshore, we have to understand the factors that are driving this trend. While exact reasons that companies decide to come back are varied, there are a few popularly cited reasons:
Chinese labor costs are expected to rise at a rate of 13 percent per year through 2015;
The cost of shipping products around the world is dramatically increasing;
Distance is making it difficult to design and collaborate on products; and,
It’s increasingly difficult (and expensive) to protect intellectual property in China.
Beyond that, bringing manufacturing back to the U.S. is great for company image and generating good will in the community as companies can tout the fact that their product is "Made in America."
And signs indicate (as was recently covered on this blog) that the community cares about keeping the trend moving forward. According to a recent poll by the American Manufacturing Allliance, 83 percent of Americans surveyed have a negative view of companies that outsource to China. With all of this in mind, it appears that the case for reshoring is growing stronger.
The big question, then is how to keep the trend moving forward? I've shared a few thoughts on how we can keep the trend moving on my blog at Software Advice. You can check out what I think by visiting What Can be 'Made in the USA'? Please stop by and leave your thoughts on how to make reshoring even more popular.