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American manufacturing makes a comeback

April 27/May 4, 2015; Volume 29/Number 2

By Ken Ryan

Screen Shot 2015-05-29 at 5.07.01 PMThe often-repeated notion that the U.S. doesn’t make anything anymore—that the country has become a service economy rather than a manufacturing economy—isn’t exactly true nowadays. In fact, the U.S. produces about ¾ of all the manufactured goods it consumes, according to the Boston Consulting Group.

Some companies continue to resist the outsourcing trend, even in industries that have fled the U.S. such as large appliances, electronics and apparel.

In 2000, Michigan-based Whirlpool manufactured most of its front-loading washers in Germany. Now the company is in the midst of making a five-year, $1 billion investment in U.S.-based plants, facilities and equipment. Of the products Whirlpool sells in the U.S., it makes 80% in domestic plants. And it continues to ramp up production of front-loaders in Ohio, where it already makes dryers, dishwashers, freezers and top-loaders.

Few TVs, cell phones or digital cameras are made in America, but in 2014, Apple began making one of its existing Mac lines in the U.S. China-based Lenovo, the world’s second-largest personal computer maker, has begun making some PCs in North Carolina, standing apart from a crowd “that has seen electronics manufacturing jobs migrate overseas for more than two decades,” the company said. Element Electronics, an American company, has been assembling LCD TVs in its Detroit factory since January 2012. The company said that opting for domestic production was “an emotional decision . . . maybe even a patriotic choice.”

More than 90% of clothes and shoes sold in America are made elsewhere, according to Houston-based Plunkett Research. However, the industry is gaining traction in the U.S. There is continued growth among designers with output too small to attract the interest of international manufacturers, and among those who simply want to be part of the Made in America movement.

Industry experts cite rising wage rates in China, higher shipping rates and lower U.S. energy prices for the recent spate of shoring moves. According to Harry Moser, founder of the Reshoring Initiative, an industry-funded nonprofit that promotes U.S. manufacturing, more U.S. companies would shift production from abroad if they analyzed the costs of overseas production to include such things as the shuttling of executives abroad and holding large inventories as a hedge against supply disruptions.

For whatever reason—patriotism or cost benefits—2014 saw an increase in manufacturing jobs brought back to the U.S. The Reshoring Initiative said in April that the U.S. realized a net migration of at least 10,000 manufacturing jobs back to the country in 2014, and that more than 60,000 manufacturing positions either returned to the U.S. from overseas or stemmed from foreign direct investment.

In addition, the analysis showed a 400% increase in reshored jobs in 2014 compared to 2003, when the country lost a net 140,000 positions to offshoring.

The group said the reshoring numbers were strongest in Texas and the Southeast, where companies tend to develop new factories in states with lower wages and taxes.