Abulhaj explains that he was one of the
people taking products from the United States to China in the early
1990s and throughout his career. "We once had 4,000 employees and did
all types of manufacturing, including injection molding, extrusion, and
assembly for high-volume products all related to the healthcare
industry," he says. "One of the main decisions that drove us offshore
was the startup of a new product - it is much cheaper offshore because
the volumes are low. But if you have high-volume products, it makes
more sense to manufacture them domestically, especially if you have
automation. We can do it at home in our back yard for the same cost,
and we have control over our intellectual property."
IP theft
is an ongoing problem with offshoring, and many OEMs find that it's
difficult if not impossible to enforce patents, copyrights, and other
laws that are meant to protect products from counterfeiters. "You don't
have laws in China that will protect you against IP theft," says
Abulhaj. "We have a lot of investment in our IP, and we have more
control over it in the U.S." He also cites quality control as a piece
of the puzzle. "We have to adhere to FDA regulations," he says. "When
you make products in the U.S., you make them to a higher standard;
particularly in healthcare, the FDA is the law. If you don't comply,
you get your products recalled. In China there are no ramifications."
Still,
Abulhaj notes that he couldn't afford to make a low-tech product here.
Yet, the major benefit for Diagnostic Devices' products is the
assurance of quality of a product made in the USA. "Everyone, even
people offshore, understands the higher quality standard of U.S.-made
products," he says. "A U.S. product is of a much higher quality, and
the consumer is driving us toward more U.S.A. products," he says. "We
need to allow U.S. manufacturers to compete more effectively."
The U.S. Manufacturing Comeback
While
globalization has had significant impact on U.S. manufacturing, there
is reason to believe that manufacturing in the U.S. can make a
comeback. Not all of globalization's impact has been negative, and many
manufacturing OEMs believe that global competition has made them
stronger, more productive, and more competitive. Global challenges have
forced companies in the U.S. to find ways to produce more with fewer
employees, and that has been borne out in recent productivity numbers.
In
July 2008, Deloitte - in cooperation with the National Association of
Manufacturers (NAM), the Manufacturing Institute, and Canadian
Manufacturers & Exporters (CME) - published Made in North America,
in which it surveyed 321 executives of leading North American
manufacturing companies across product sectors to obtain their
perspectives on their current and expected future competitiveness. Of
those surveyed, 45 percent were from the U.S., 36 percent from Canada,
and 17 percent from Mexico. Among those companies, 23 percent had
revenues over US$1 billion; 15 percent had revenues between US$200
million to US$1 billion; and 62 percent were below US$200 million in
revenues.
Overall, the results indicate that North American
Manufacturing Enterprises (NAMEs) - as the survey refers to them - have
a "positive view" of their global competitiveness. Many would "strongly
prefer" North America as a hub for their manufacturing operations in an
ever-expanding global economy "if proper investments (both public and
private) are made and if government policies focus more on reducing or
eliminating competitive barriers."
When asked where they would
be expanding production, 44 percent said in the United States; 37
percent said Mexico; another 37 percent said China; 24 percent said
Canada; and 24 percent said India. Obviously, some will be expanding in
more than one country. When asked where sourcing would be expanded, 50
percent said China; 49 percent said the United States; 43 percent said
Mexico, and 23 percent said Canada.
Nypro Inc., a global
contract manufacturer of custom plastic components with 1,500 presses
at 49 locations in 16 countries, began nearly two decades ago putting
manufacturing plants near their customers wherever those customers
needed their suppliers. Richard Moore, the company's global director of
technology, said in a recent presentation: "We are seeing a shift now,
from everything going toward Asia to wanting to manufacture more
products locally for the large U.S. consumer base. Not that it's all
coming back from China, but with respect to sustainability there is a
lot of concern by the big brand-name companies with respect to carbon
footprint, and consumer concerns are driving this."
