I just read an article in the Atlantic that represents an idea I’m seeing more and more in writing about American manufacturing: There’s a chance it might be coming back for good.
Rising Chinese wages, manufacturing innovations and over-commodification of certain items all seem to be pulling companies back to building in the USA. Higher wages for labor obviously cut into margins and defeat the whole point of outsourcing. Companies like Nike, once famous outsourcers, are figuring out amazing, labor-reducing ways to build their products that could lead to much more feasible U.S. production. And over-commodification screws companies in a number of ways, but mostly in the way that if everything costs the same and is built from the same stuff, how do you market your products in a meaningful way?
So once all these problems build up and hit the critical point of “Welp! We can’t pay for that anymore!” the thinking is that manufacturing will inevitably come back to the states, at least partially. In the U.S., higher labor costs will be offset by lower transportation fees and a smaller overall staff, unique technology and component sources will makes marketing much easier, product stocks will be more stable and easier to adjust, etc.
How much and to what degree U.S. manufacturing will come back is hard to say. I suppose these factories could just leave China and move to a new country, like India or Brazil or whatever. But, some of the other issues breaking up the value of outsourcing, like labor-eliminating technology and the high cost of transportation, are only going to become more pronounced as time goes on. So at the minimum, it’s probably safe to expect a little more parity in U.S. vs. overseas manufacturing in the future. But, if even if it comes back only a little bit, that will probably be good for your business!
Your purchasing costs as a distributor will (probably?) remain similar, but you’ll be able to get product faster and more reliably, which is certainly good and helpful in making more money. So that’s something nice to look forward to I guess!
Thanks for reading guys, and see you all next week!
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MONDAY MIKE FACT: My girlfriend and I have come to the agreement that Home Depot “smells awesome.” Some weird chemical mix of sawdust and solved problems? Who can really say?!
