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Why "Made in America" Makes Good Business Sense

Other countries can offer lower labor costs and less regulation, but the U.S. is still the number one place to make sophisticated, high-cost goods.

Location USA 2012
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Other Concerns
Executives also raised concerns over other issues like inconsistent application of intellectual property laws, human rights issues, product quality-control deficiencies, and the lack of environmental regulation in developing countries, particularly China. "Now that oil and transportation prices have gone up, productivity gains are not as big as they were, and there are issues around risk in supply chains; companies are starting to go where the customers are," Accenture Managing Director Matt Riley says. Illinois has benefited from this trend. The state added more than 20,000 manufacturing jobs since January 2010, according to the U.S. Bureau of Labor Statistics .

Of course, major challenges still lie ahead. The World Bank says the U.S. has one of the top 10 infrastructures in the world - economic rivals like China, India, and Brazil didn't crack the top 25. Bolstering America's case is ocean accessibility on three sides, many large and expanding seaports, interior lakes, navigable rivers, and an extensive rail and highway network.

It's true that the country's supply chain infrastructure needs updating, if the United States is to retain its competitive advantage. With that in mind, President Obama has proposed creating an infrastructure bank in his 2012 budget as a centerpiece of a 10-year, $640 billion plan for upgrading and rebuilding 150,000 miles of roads, bridges, transit systems; reconstructing 150 miles of runways; and constructing and maintaining 4,000 miles of rail lines.

There is talk of private investment, too. The BNSF, one of the largest U.S. railroads, plans to invest $3.5 billion this year in infrastructure improvements including network upgrades and locomotives. U.S. ports are also contemplating improvements in anticipation of the Panama Canal expansion, which is expected to be completed in 2014.

The expanded canal will accommodate mega-container ships capable of carrying up to 12,600 twenty-foot equivalent unit (TEU) containers - approximately 50 percent more capacity than the typical container ship of today. This will increase economies of scale in reaching the East Coast of the United States - where two-thirds of the population lives.

The proposed investment shows the federal government and private industry understand how important manufacturing will be to the U.S. economy in the 21st century.

The Number-One Place To Be
Other countries can offer lower labor costs and less regulation, but the United States is still the number one place to make sophisticated, high-cost goods.

Though the U.S. dollar is relatively weak, American currency has a long, stable track record, and - if anything - the dollar's present off-peak status creates more incentive for foreign investment dollars. What's more, investing in the United States is a safer alternative to investing in developing countries, with their potential political and human rights problems and challenges to protecting products and information due to lack of regulation and inconsistent application of intellectual property laws.

China, for example, has been the origin for as much as 80 percent of counterfeit and pirated products seized by U.S. Customs, with confiscated goods valued at $158 billion. Given the significant investments that companies make in research and development and manufacturing techniques to gain competitive advantage, nobody wants to lose their "secret sauce" to theft or reverse engineering.

And while its stringent environmental and safety regulations may occasionally irk manufacturers, these help prevent the serious brand damage and potential liability generated by hazardous products from countries with less stringent laws.

As with any thoughtful business decision, there are many factors to weigh and trade-offs to consider. When evaluating manufacturing/sourcing site selection decisions, supply chain/operations executives must rely on an objective, fact-based approach to ensure they arrive at the most optimal and profitable, long-term solution. Taking all factors into consideration, it is clear that the United States stacks up well from a manufacturing standpoint. With its skilled labor pool, stable political environment, supply chain infrastructure, business incentives, real estate values, and large consumer base, the United States will continue to look more attractive for foreign companies looking to make their products on U.S. soil. "Made in America" simply makes good business sense.

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