US manufacturing has garnered more and more mainstream attention lately. A recent New York Times post about the return of US Manufacturing poses the question of whether this historically crucial industry will return to its original splendor. The article comes during an extra-volatile week for the slowly recovering sector.
In part, it is a direct response to recent developments in China, including decisions to “loosen up” control over their currency and the increase in wage-related strikes by Chinese workers. More importantly, it discusses a major point that has eluded so many over the past years:
The true cost of manufacturing reaches far beyond the price of making the product itself.
That is, when a company decides to outsource production or product overseas, the true cost comes at every step of the supply chain. What many have learned in their frenzy to “save a buck” is that the dollar saved on the widget is many more dollars lost in:
- Lack of quality control
- Increased lead times and overhead in product delivery (fuel surcharges & expensive containers, anyone?)
- Increased response time on overcoming quality & other issues
- Delayed payment & overstretched credit
- More up-front investment required to keep the chain flowing
- Longer supply chains equal greater opportunity for error
All this associated costs goes with out mentioning the fact that a once global powerhouse has been brought to its knees, hemorrhaging everything from jobs to raw talent over the past 3 decades.
Don’t give up. It’s not over Yet.
If you’ve been following us lately, you’ll know we’ve been keeping a close eye on American manufacturing. Onshoring (a.k.a ‘backshoring’ or, as the Times calls it ‘near-sourcing’) is a fast-growing trend in this country. Manufacturers once dazzled by the rush to ‘get it cheap’ are waking up to the true cost of those decisions and the real benefit of working as domestically as possible. Manufacturing output has increased steadily over the past three months, and it’s only getting better.
I encourage you to go ahead and check out the post for yourself. It’s a well written piece focusing on the problems and the resulting turnaround we are seeing unfold. From the standpoint of small business, it mentions the poignant, and often familiar, sentiments of smaller manufacturers who have managed to weather their success throughout the storm while noting that there is a time and place for outsourcing; although not at the level we have seen it in the past.