Industry returns from China
- Last Updated: 12:37 AM, July 18, 2012
- Posted: 10:18 PM, July 17, 2012
News of our Olympic team’s uniforms being made in China has prompted Sen. Chuck Schumer and others to fulminate anew about exporting jobs. But the future’s going to look very different: It’s China that’s going to be worrying about losing jobs to us in the next few years.
US manufacturing is coming back home, from China and elsewhere. The trend started five years ago; since early 2010, it’s created more than half a million jobs in America.
By 2015, the Boston Consulting Group estimates, US industrial firms will add 800,000 more jobs — jobs that aren’t going to China, but staying right here.
Call it Rising Eagle, Flailing Dragon.
Investment money has stopped flowing into China since last September; since April, it’s actually been leaving the country, as China’s manufacturing sector has registered seven straight months of decline — while ours (despite a sharp contraction last month) stands 8 percent higher than it was before the recession.
“Made in China” may be going the same way as “Made in Japan” did a couple of decades ago. Yes, China will still produce plenty, just as Japan does — but it won’t be an issue.
And China is going to have to import more of the goods its consumers crave but can’t get at home. By 2020, in fact, it may be the Chinese Olympic team that’s buying its uniforms in the United States.
The back-to-America trend is called “reshoring” — and it’s replacing outsourcing, fast. From steel and computers to furniture, plastics, clothing and rubber, there’s a $2 trillion-a-year US market for manufactured goods, and American companies are finding plenty of reasons to tap into it directly from here.
Among large firms with $10 billion in sales or better, almost half (48 percent) say they’re planning to move, or already have moved, their production facilities back to the States.
They include Master Lock, which recently returned to its original home base in Milwaukee, and NCR, which set up its ATM manufacturing division in Georgia. Appliance Park in Louisville is filling up again, as GE moves manufacturing divisions back home from China.
Why? One reason is the added transportation costs of moving finished goods from overseas, especially across the Pacific. Another is quality control, as US workers using new computerized tools and processes get better results than India’s or China’s low-cost-but-low-skilled assembly lines. Then there’s rising Chinese labor costs, which jumped 13.6 percent last year.
Still another is the risk of doing business in a country like China, a dictatorship with a still-uncertain future. This year’s rumors of a military coup in Beijing spooked not only financial markets, but also CEOs of American companies looking at the vulnerability of their China-based operations if that country descends into chaos.
By contrast, producing in America comes with the rule of law and an environment that still fosters free-market competition, including for labor. As the number of right-to-work states grows (Indiana became the 23rd in February), expect firms both American and foreign to look to open plants where labor isn’t stifled by union rules, and where they can deploy the latest “smart” manufacturing technologies.
Michelin is breaking ground on a new tire plant in South Carolina; Volkswagen has new facilities in Chatanooga, Tenn., and Airbus is building a $600 million plant in Mobile, Ala. Samsung plans to invest more than $20 billion in various US manufacturing enterprises.
Those “smart” technologies involve lasers and new artificial materials and alloys — as well as computerized databases and cloud information technology to lower costs and speed up delivery. Just around the corner: “3-D printing,” which can make specific products literally at the click of a mouse — including athletic apparel.
So don’t let the Olympic-uniform flap hide the bigger story. The future of manufacturing is right here in the United States — just as it was in the age of Carnegie and Rockefeller and Henry Ford.
“Made in the USA” is here to stay.
Arthur Herman’s latest book is “Freedom’s Forge: How American Business Produced Victory in World War Two.”Follow @NYPostOpinion