Category Archive: Reshoring

U.S. Production Costs Becoming Competitive With China

A new report has shown that over the past 10 years, manufacturing in the United States has started to become more competitive compared to many low-cost rivals- the most notable one being China. Today, U.S. factories are able to produce goods at cheaper prices than many of those produced in Eastern Europe. According to the Boston Consulting Group (BCG), it is now less than 5% cheaper to produce goods in China compared to the United States, which is quite good considering that the U.S. wasn’t even on the map prior to this.

The Problem with Outsourcing

One of the biggest conversations surrounding American manufacturing these days is reshoring; companies of all sizes are bringing business and jobs back to American soil. It’s welcome news for the industry.

As some companies still make the decision to outsource—and as many of us focus on the reshoring trend—what many people are not talking about is whyoutsourcing is such a bad decision, not just for the country, but for those individual companies.

Outsourcing is complex and often fraught with problems.  The actual process of moving manufacturing overseas, and then making sure it is being done correctly and efficiently, is even more complicated than it sounds.

The Rebirth of Made In America

For many years, Made In America became synonymous with higher labor costs and declining quality. Company after company took their business overseas looking to boost profits. Without question, this mass exodus was devastating to the economy, as it stripped once proud towns and cities of jobs, factories, and pride. Thankfully, the trend of outsourcing is starting to reverse itself.

So, what has brought about this shift towards reshoring? As with any economic movement, a number of different variables are driving manufacturing back to American soil, as seen in this article. There are a couple that really standout.

Labor Costs: When reshoring first became a trend, costs of labor were much cheaper in places like China and Mexico than they were here in the U.S. Now, according to this article, those wages have grown 15-20% annually, making the wage discrepancy much shorter. As a result, companies are bringing manufacturing back to the States.

Quality: There is little question that the quality of American-made products outstrips those from most countries. We have an amazing pool of workers with superior training and education on every level of the manufacturing process.

Things are changing so quickly, that even the undisputed champion of low-cost, outsourced retail, Wal-Mart, recently pledged to buy an additional $50 billion in U.S. made goods over the next decade. It is a perfect sign that there is not only an emotional desire to bring manufacturing back to America, but also one built on profit margins.

At American Industrial Company, we have never strayed from our commitment to American made products. Since 1981, we have proven that you can manufacture high quality precision metal stampings in America, with American workers, and still compete on the world stage. From the look of things, more and more American companies are starting to come back around to our way of thinking.