Is American Manufacturing Worthless?
Is American Manufacturing Worthless?
September 22, 2015
American manufacturing is slowly emerging from the industrial decline that occurred in the 1990s and the 2000s when there was a massive offshoring of manufacturing to China and other countries on the premise that lower wage costs would reduce manufacturing costs. What advocates of this trend did not fully appreciate were the significant disadvantages of having manufacturing performed in time zones that were out of kilter with American working hours. In addition, companies faced long shipping and manufacturing lead times that led to significantly higher inventory holding costs as well as untenable delays when changes or alterations to orders were required.
It took a while, but gradually there was the realization that the disadvantages of offshoring were significant and in many cases outweighed the benefits, some of which were being eroded by increases in overseas wage and manufacturing costs.
It needs to be acknowledged that part of the reason for offshoring was a decline in confidence in U.S. manufacturing as well as an attitude of complacency, which was shaken to the core by the significant job losses. During that period, many companies held off investing in much needed manufacturing improvements because of this loss of confidence, which consequently exacerbated the trend towards manufacture in the Far East.
Despite this, there was always a core of dedicated U.S. manufacturers, and their response was to focus on ways to reduce manufacturing costs and remain competitive. These led to the establishment of improved design practices that reduced manufacturing complexity and the introduction of automated equipment that lowered manufacturing costs. It’s interesting that many of these companies thrived, demonstrating the need for and value of American manufacture.
The value of local American manufacture is even more evident for low volume and bespoke manufacturers, especially with equipment and plant that needs to comply with stringent manufacturing standards. In particular, the advantages of the same language, similar time zones, uniform currency, easy shipping and ease of access come to the fore. What is also evident is that American manufacturers have adopted lean manufacturing practices that make it possible to reduce inventory, improve product quality and shorten delivery times.
The results of all this is that the total cost to the customer is lower and the time from initial order to product delivery significantly shorter. America has large resources of talented and skilled workers and the engineering abilities to excel in manufacturing and to outperform offshore manufacturers.
