Why (some) manufacturing is returning to the USA


46 Responses to “Why (some) manufacturing is returning to the USA”

  1. theophrastvs says:

    so that “giant sucking sound” is now more of a “wheezy exhale”?

  2. Dcoronata says:

    GE purchases a lot more from contract manufacturers and OEMs than they build themselves.

    I know, I sell stuff to GE, most of it made in the US.  But I also compete with GE, usually with Chinese products and most of that terrible beyond all imagination. I spent most of last week evaluating our new acquisition, a US company that sold almost exclusively Chinese purchased items here in the US.  There is a great deal of cross-polination, a lot of their products are sold (under a different name) by GE, and they are hideous.  Shoddy workmanship, horrible use-interfaces, and just purely terrible mechanical designs.

    GE will buy anything they can sell for profit, no matter how bad it is.

  3. Joe Buck says:

    “Falling wages” seems to be a big factor.  These new manufacturing jobs don’t pay much.

    • corydodt says:

      I think “rising wages” is just as big. There is a huge overhead cost in sending jobs overseas, even if it’s just the oil they put in the boat to bring that shit back over here. Those jobs moved as soon as it became a little bit cheaper to work over there. As soon as it becomes a little more expensive–a small rise in wage expectations ought to be enough–the US is cost-competitive again.

    • Jardine says:

      Especially when you factor in how much municipalities are willing to give huge tax breaks and subsidies so they can actually have some jobs in the area.

    • Thorzdad says:

       I think the key point is this one:
      “…the efficiencies that arise from locating workers next to managers and designers”

      In other words, “Things run better when the white-collar people are in the same facility as the factory workers. Unfortunately, none of our white collar people were willing to relocate to China, and it just wouldn’t be right to replace *them* with Chinese designers and managers. If we did, would replacing our *executives* with Chinese counterparts be far behind? We can’t have that!”

  4. Phlip says:

    Yay! A hardware manufacturer has discovered Lean Design … AGAIN

  5. corydodt says:

    Economics wins again.

  6. Russell Barron says:

    I was taught (by a macroeconomics professor with obvious biases) that globalization is a rising tide that raises all ships. Now that manufacturing is slowly starting to return after boosting the Chinese economy at the expense of our own, It seems like the crests and troughs of waves. It will take another 20-30 years I think to definitively say whether the tide is actually rising, but at least the jobs are slowly starting to come back. If nothing else, I think it would be easier to trap the jobs here as they return than to try and entice them back from a more profitable position overseas.

  7. jbond says:

    Iterative design, much? Take that new improved, lean, design and go back to China to get competitive bids on manufacturing it. And chop another 20% off the production costs.

    • ChicagoD says:

      Not anymore. That’s ten years ago.

      Vietnam? Maybe.

    • KWillets says:

      The point is that 10 iterations in the US are cheaper and faster than 10 iterations from the US to China.  

      • jbond says:

        Sorry, I’m just reading that story as a criticism of the engineers doing the original design and the managers who were supposed to be running the outsourcing. This doesn’t feel like a a story about how manufacturing in the USA works better than in China but rather about how GE is useless.

        • KWillets says:

          I think we somewhat agree, but for bleeding edge products, it can be easier to have R&D and production at the same site.  Heat pump water heaters are not a perfected product — lots of pitfalls have come up, and even the customers aren’t sure what they need.  

  8. Navin_Johnson says:

    American labor and wages have been squashed enough that welfare queens like G.E. see the convenience of having some things made back in the (more third world-ish) U.S. but at what will probably be closer to Wal-Mart wages with the rest of citizens having to subsidize the hidden costs of those low wages. All while the brass of companies like G.E. have seen their wealth rise and rise and rise. A climate where the CEO of G.E. helps guide Obama administration’s hand on business policy.  Economics!…..oligarchy…

  9. Urbane_Gorilla says:

    And then there’s the issue of dealing with Chinese companies, graft & corruption, and of course, the Chinese government.

  10. oldtaku says:

    We do manufacturing here in the US for the same reasons (and some in Singapore). Nothing beats being able to get an engineer out on the manufacturing floor right now. If you’re working with a third party Chinese firm, the list of wasted money, easily avoided blunders, and manufacturing horrors is endless. Such as the time one swapped a motor to save themselves 5 cents – not mentioning it to anyone, of course – and then they all burned out in the field. Another time they swapped the order on all the connector pins. And everything just takes far longer than it should.

    I think some US management is starting to realize that for some things a bargain is not actually a bargain. Even MBAs can learn?

    • Cowicide says:

      I think some US management is starting to realize that for some things a bargain is not actually a bargain.

      Also, the successful class war on average American workers has done wonders…

      • paul beard says:

        It’s not whether management figures it but if consumers realize that Lower Prices Always is not sustainable, that the wages you cut by shopping at places that don’t value labor might be your own. Management, MBA-style, is all about cutting costs and competing on price, making the quarterly targets and collecting a bonus.

        • Cowicide says:

          Agreed, and the entire sick cycle keeps being perpetuated by keeping people in the dark via the same “news” media the corporatists own.  That’s basically one of the goals of OWS is to penetrate this vast media firewall.  It’s been successful to a huge extent so far, but there’s still a long, long way to go unfortunately.

  11. stealthisbook says:

    Interesting the GE is investing in Appliance Park now that Louisville has snagged a major infrastructure upgrade as an early adopter of gigabit fiber. I wonder if that was a factor in their decision to site manufacturing and design together.
    Perhaps we’ll see similar stories about Kansas City now that Google Fiber is rolling out.

  12. s2redux says:

    If you’re one of the water heater manufacturers who never left – Bradford-White, State, AO Smith, Rheem, American, et al. — I guess you just read this article and sigh.

  13. Harvey says:

    Nice anecdote, but bad example. They took a poorly designed and expensive (as a result) product, redesigned it to be better and cheaper and now it’s better and cheaper. How much would the Chinese charge to make the new and improved version?

  14. Coincides with the news that Apple is apparently doing some iMac assembly in the US:  http://news.cnet.com/8301-13579_3-57556666-37/some-imacs-labeled-assembled-in-usa-teardown-shows/

  15. paul beard says:

    Politics aside, this seems like a vindication of the notion that design is not the outer trim details but how the object works, how the components are fitted and assembled. Poorly made products are not always the fault of the assembler. The decisions that inform quality, durability, and reliability are often made many pay grades above the people who handle the product. Took awhile for US automakers to figure that out.

  16. KWillets says:

    Ironically the article mentions the decreasing cost of natural gas in the US, which makes manufacturing cheaper.  Unfortunately it also makes electric water heaters like this one less attractive.

  17. dioptase says:

    I work for a Chinese company.  Part of my job involves moving some of our production from China to the USA.  Not for sale in the USA, but for export to China.  Why?  Because the Chinese don’t trust Chinese products and will pay more for made in the USA.  And the cost isn’t that much more.  With the improved component and assembly quality, we actually expect to reduce our costs.

  18. Tetsubo Kanamono says:

    I work in US manufacturing. I make auto parts. I have survived four lay-offs within the past 4-5 years. We are doing OK at the moment. Not great but OK. I am part of an international, family-owned corporation. I think that might be a positive. At least we aren’t headed by short-sighted US management teams.

  19. lecti says:

    A little off main topic, but I don’t know anyone who found Ikea furnitures difficult to assemble (although they tend to fall apart after a few moves).  Is it that confusing??

    • jhoosier says:

      I couldn’t figure out “IKEA Syndrome”.  Googling it just got me the urban dictionary, which isn’t applicable, or some talk about how labor costs in Sweden.

  20. Nicky G says:

    OK, I’ll bite — wtf is a GeoSpring?

  21. Roy Trumbull says:

    A long time ago when Japan was just ramping up they had a terrible inferiority complex to deal with. If you went into an executive’s home you’d find he’d bought a lot of American appliances and electronics because to be good it had to be American. Not only that, to be really good it had to come from Hollywood.
    A friend made standard tapes for all forms of magnetic recording. If the order was going to Japan he’d ship it to L.A. where an agent would send it out with a Hollywood address as the return address. I’m not making this up. He made good money because of it. One wonders what goes on in the minds of the Chinese these days?

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