For the past year, the conversation surrounding U.S. manufacturing has been focused on its recovery—with many people going so far as to call it a renaissance.
Companies of all sizes are increasingly reshoring—returning business to American soil—and many domestic startups are beginning their operations here at home—a term being coined newshoring. Yet amidst the news and data pointing to this manufacturing recovery, there are people who are questioning its reality and its truth.American manufacturing
First, let’s look at the facts: in April, new U.S. factory orders increased for the third month in a row, exceeding expectations and hitting a record $499 billion.[1] Thankfully, numbers don’t lie, and further numbers point to this growth: employers added 217,000 jobs in May, making it the fourth consecutive month of job gains, while the number of Americans filing for unemployment dropped close to pre-recession levels.[2]
So it seems as if this reported recovery is, indeed, happening. Now let’s look at the reasons why. There are many, but here are a few:
- Cost effectiveness: While this isn’t necessarily the primary reason for manufacturing at home, it’s an important one; rising labor costs overseas have made outsourcing much less profitable, while making American labor more competitive.
- Risky overseas supply chains: Seeking quality and control first, American companies realize how powerless they are over supply chains located thousands of miles away. When they produce goods close to home, they can control everything from the quality to the shipments, and this is very important to them.
- Abundant domestic natural gas: The discovery of low-cost natural gas in the U.S. has given America a boom in energy sources, while global oil prices are extremely high. Manufacturers here are finding that instead of dealing with high transportation costs overseas, they can manufacture at home and save millions of dollars.
It seems the reasons for manufacturing in America are many, and the benefits trickle down and around the country, boosting employment, individual businesses, the economy, and all-around consumer confidence. Domestic manufacturing seems to simply make sense—and the word is definitely spreading.
[1] http://www.latimes.com/business/money/la-fi-factory-orders-manufacturing-economy-20140603-story.html
[2] http://www.brandonsun.com/business/breaking-news/markets-look-to-us-for-guidance-this-week-no-canadian-figures-set-for-release-264150231.html?thx=y