As champions of the American manufacturer, not to mention suppliers and consultants to them, we always like to share a cheer when we read about yet more proof of production formerly sent overseas being moved back to the U.S.A. And just in time for the 4th of July — how appropriate.
Our most recent example comes from the June 25th issue of Bloomberg Businessweek magazine, in an article in the Enterprise section entitled “Made in China? Not Worth the Trouble.”
The article points out, like others before it, the growing trend in manufacturing jobs previously outsourced to China returning to our shores. It cites as an example an April poll of 259 U.S. contract manufacturers showing that 40% “benefited this year from work previously done abroad.” As the CEO of Outsource Manufacturing noted “A decade ago you just went to China. You didn’t even look locally. Now people are trying to come back. Everyone knows they’re miserable.”
As one company owner from California said, “It’s probably 30 percent cheaper to manufacture in China. But factor in shipping and all the other B.S. that you have to endure. It’s a question of, ‘How do I value my time at three in the morning when I have to talk to China?’ ”
Turns out, managing production 12,000 miles and 12 time zones away is no simple matter. Often, shipments, which take weeks to arrive, get tied up in customs. Quality concerns have grown in recent years. And explaining a small tweak needed in a product can require multiple and painful phone calls. It’s not like walking down to the plant floor to fix it.
Worse still, manufacturers face daunting minimum order requirements when manufacturing overseas. As one manufacturer of sound effects pedals for the music industry complained: “You have high minimum quantities you have to order, so you’re building a couple thousand of every guitar pedal. Your carrying costs start to get huge.” As a result, that company, Pigtronix, decided to return production to the U.S. where today, they say, they make only those pedals they are confident they can sell quickly.
In its conclusion, the article sums up the current state of China-based production, which is that “while goods for U.S. consumers are less likely to be made in China these days, overseas production may still make sense for companies that plan to target foreign markets.” Quoting another CEO from Minnesota: “What we’re seeing is regionalization, buying stuff from manufacturers in the region where you’re going to sell it. It’s very noticeable… We’ve seen movement in terms of manufacturing in country for country.”