Many American businesses are reevaluating their offshore business plans because of increasing labor, production and transportation costs. In fact, business experts are predicting the number of companies that move production back to the US will increase over the next five years. This is great news for American workers, and for the US economy. Approximately 225,000 new manufacturing jobs have been created during the last year alone.
Leading the world in manufacturing.
The US is far and away the number-one manufacturing company in the world and will produce close to $2.2 trillion worth of goods next year. China is ranked number two in manufacturing, but the country produces 40 percent fewer goods than the US. In addition to leading the world in total manufacturing production, the US sets the standard for efficiency. US factories produce far more products with fewer workers. While the US is the top-ranked nation when it comes to overall manufacturing, there are several key sectors that we’ve lost our number-one ranking in. These include the steel, cotton, coal and automobile industries.
The true cost of outsourcing.
US companies that outsource manufacturing to other countries have to deal with complicated supply chains, factory setup/equipment costs, intellectual property issues and shipping and distribution costs, to name a few. Additionally, employee wages in other countries continues to rise each year. Once all of these costs are factored in, the financial advantage of outsourcing is becoming less apparent than in years past. Next, companies can operate more efficiently by keeping their manufacturing in the US. For example, if a product that is being produced overseas has a problem, or if the equipment needed to make it malfunctions, time is of the essence. The parts and supplies need to be readily available to ensure any downtime is kept at a minimum. Having to ship these items overseas can put a roadblock in the production of any factory or manufacturing plant.
Every business owner knows that top-quality products mean satisfied customers and increased sales. Having total control over all aspects of manufacturing allows for better quality assurance, and this can prove difficult for companies that outsource to other countries. Even with the right supervisors, employees and quality processes and procedures, there is always the possibility that something can go wrong, and being able to address the situation right away is very important. Being able to oversee and manage all of your operations can lead to consistent quality of the products being made, increased sales and decreased chance of litigation.