Has the world economic climate changed so much that it really can be more cost effective for a business to build its products at home again?
For some manufacturers, the answer is yes. As the Business Journal reports today, about 10 percent of the half-million manufacturing jobs created in the U.S. over the past three years were the result of production returning from foreign shores. One such story can be found at Lancaster-based Pequea Machine, which discovered it was paying about the same to make gear boxes in China as it would in Pennsylvania — but sacrificing quality for nominal savings.
Reshoring advocates note that, even without the rising cost of foreign labor, off-shore manufacturing can cost the same if not more than American production when you factor in warehousing and transportation as well as loss of control over production. In addition, the risk of losing trade secrets and the decreased innovative opportunities sparked by manufacturing at home add intangible costs.
Offshoring can lead to brand issues, too. Apple, for example, took a hit to its image last year when consumers learned about harsh conditions in its Chinese assembly plant, and many more consumers today consider a product's carbon footprint before deciding to buy.
Reshoring faces a number of obstacles here at home, however. First among them is the difficulty manufacturers have in hiring. They have yet to overcome the stereotype that industrial work means days filled with sweat and dirt, and the U.S. continues to lag in the STEM education that produces qualified workers. Science, technology, engineering and math are hot career fields, but student interest continues to lag as schools struggle to marshal teachers and resources in the face of tightening budgets.
We've been hearing for two years now that the commonwealth would move swiftly to improve job matching between employers and job seekers, but little seems to have changed in that arena. Moreover, while Gov. Corbett touts his increased commitment to funding education, the lion's share of the money is being swallowed by the enormous unfunded liability in the Public School Employees' Retirement System.
Reshoring will never bring Pennsylvania back to its manufacturing glory days, but an economy is grown and sustained one job at a time, just as businesses thrive or fail one decision at a time.
Manufacturers shouldn't automatically assume sending work out of the country is the cheapest alternative. Pequea Machine's decision two years ago to reshore improved quality, preserved jobs in Earl Township and made work for two other smaller companies.
Should that success story be yours?