Made in America and other Benefits of Reshoring

For the last couple of decades, trends in manufacturing made it hard to believe that the industry was ever so strong it was considered a powerhouse in the United States. Off shoring became the more economical choice, and so U.S. plants shut down, people lost jobs, and Asia became a popular place to manufacture a wide range of goods.

“You went to China because it was just so cheap you couldn’t help it,” says Harold Sirkin, a senior partner at Boston Consulting Group (quoted in this NPR article.)

This was devastating to both the U.S. manufacturing industry and also the “Buy American” movement. Anyone looking for products made of parts that are entirely manufactured in the U.S. really had his work cut out for him. In a post-9/11 world, when Americans were really banding together, this was tough.

In the last few years, however, the off shoring trend has started to change. More and more companies are reshoring – bringing their manufacturing back to the U.S. This is in large part attributed to a shift in cost-effectiveness; quality issues and consumer awareness have played roles as well.

What has changed

There are a number of factors that have shifted manufacturing costs to the U.S.’s favor. The most talked about is the increasing wage rate in China. Labor costs have been steadily increasing there as workers demand more pay, whereas labor costs in the U.S. have remained relatively steady.

Wage increases alone won’t instigate an entire movement to rehsore, though. There are many other economical factors at work here.

Quality control is a standalone issue, but it also figures into overall cost. In the design-engine.com article, “Production Jobs Return to the U.S.,” Lonnie Kane, president of Los Angeles apparel maker Karen Kane, speaks to this issue. For his company that used to only check 10% of goods from China, he stated, “We got to the point where everything we were bringing in had to be inspected. Now prices are escalating, quality is dropping and deliveries are being delayed.” Consequently, Kane has shifted 80% of his production from China back to the U.S.

Speaking of deliveries, transportation costs are weighing more heavily on the bottom line. Domestic shipping comes with other benefits, as well: “Given growing global demand for energy, transportation costs will likely remain elevated, making production closer to home more attractive.  This can also cut down on lead times, reduce inventory levels, mitigate some currency risks, increase control over intellectual property and reduce supply chain disruption risks” (“Rising Labor Costs Not the Sole Factor Influencing Potential U.S. Manufacturing Resurgence, Says PwC US,” pwc.com.)

Thanks to fracking and new drilling technologies, the U.S. has also seen a boom in natural gas production. We compare a 25% decrease in gas prices here to a 138% increase in China (“Production Jobs Return to the U.S.”)

Additionally, manufacturing has automated many processes in the U.S., driving labor costs down even further.

On top of all this is the nation’s growing preference for American-made products. Wal-Mart made headlines last year when it pledged to spend $250 billion on products made in the U.S.A. over the next decade.  This initiative is significant to rebuilding the middle class and moves us out of the “hourglass economy.” Americans well understand the economical impact of buying American, and they care enough to make conscientious purchasing decisions.

Of course, buying American is not limited to appliances, electronics, apparel, and other retail products. Vinyl Art manufactures a wide array of products in Minneapolis, Minnesota. They supply companies with flexible packaging, marketing materials, office supplies, presentation materials, and every other flat pocket or pouch one could need. Vinyl Art is also increasing its efforts to offer eco-friendly materials. Almost everything they make is recyclable and Prop 65 compliant; most products can even be made from 100% recycled, biodegradable material for large orders.

This is just one example of the many businesses that manufacture quality products in the U.S. Thanks to the numerous advantages of bringing plants back to the United States, that list of manufacturers will continue to grow. Between the reshoring efforts of various companies and domestic businesses like Vinyl Art, Americans have much easier access to products made right here at home.

For information on license holders, business card pockets, adhesive pouches, sheet protectors, packaging, and more, contact Vinyl Art: 800-569-1304 or sales@vinylart.com. We would be proud to help you today.