Editors Note: Why Can't We Make Those Gadgets Here?
As the cost of manufacturing overseas increases, the re-shoring of American manufacturing in the tech industries would not only shorten the supply chain, but also reduce its impact on the environment, while providing Americans with well-paying jobs.
Geraldine Gambale, Editor, Area Development Magazine (August 2012)
The U.S. economic recovery continues to disappoint. The Commerce Department has reported that U.S. growth slowed to 1.5 percent in the second quarter of 2012 as consumer spending slowed. And although the July labor picture was slightly improved - with employment rising by 163,000 jobs in July up from just 64,000 added in June - unemployment ticked up from 8.2 percent to 8.3 percent, indicating jobless workers are giving up on their searches and leaving the labor force. So how does the nation create more jobs?
Many argue that U.S. companies that are among the world's greatest innovators, e.g., Apple, Dell, Hewlett-Packard, need to bring the manufacturing jobs that they have outsourced to Asia back home.
The argument centers on how best to get this done. Some policymakers suggest raising tariffs against countries that engage in unfair trade practices; others think more incentives, including tax breaks, are needed to encourage manufacturing in the United States. Needless to say, higher U.S. wage rates would raise the price of all those smart phones, iPads, and other gadgets now produced by lower paid workers overseas to the chagrin of U.S. consumers.
However, those same U.S. consumers are today very concerned about the environment, upon which long supply chains have a negative effect. Savvy companies are learning that a green supply chain not only reduces their environmental impact but can also boost their bottom line, according to Michael Jordan, Senior Vice President of Sustainability Strategy at Jones Lang LaSalle (see "How Smart Is Your Supply Chain?" this month). Manufacturing products closer to the end consumer may make sense from an environmental vantage point. And as labor costs rise overseas, taking into account the total cost of ownership - including transportation costs and supply chain risks - might also encourage some firms to re-shore their manufacturing operations.
Will U.S. consumers start to care about where all their electronic gadgets are made? If given the choice, would they be willing to initially pay a little more for that smart phone labeled "Made in the U.S.A."? Maybe so - if they can get one of those well-paying jobs created by companies that are manufacturing in America.