The return of manufacturing jobs in the USA has gradually been on the rise, as we’ve been reporting for the past few years, but we still see a lot of uncertainty about whether that increase is meaningful. According to the U.S. Bureau of Labor Statistics, the number of manufacturing jobs in the US has increased from approximately 11,400 jobs in January 2010 to approximately 12,100 jobs in April of 2014. Although there is certainly evidence to support the claim that manufacturing has made a return, the data raises a further question: why has the increase been so small?
The process of bringing more manufacturing jobs to the USA may be more complex than we think. With the cost of labor in China on the rise, and widely differentiating prices for the costs of electricity and natural gas around the world, the word “insourcing” may start becoming more commonly used in our vocabulary without leading to a flood of new jobs. While there are still some lower end labor-intensive jobs being outsourced to low cost regions of China, higher end manufacturing jobs are simultaneously being relocated to the United States. But unfortunately, this is only the tip of the iceberg.
The heyday of offshoring has led to some reductions in U.S. manufacturers’ supplier base, workforce, and internal capabilities. Companies that want to source products in the U.S. are sometimes finding it hard to locate factories that can meet their needs. It may take time to repair that damage.
However, according to research recently conducted by Willy C. Shih of Harvard Business School, there are numerous benefits to relocating manufacturing closer to the American market. Doing so would ensure that both the inventory of goods in the pipeline and the length of delivery would reduce significantly. Moreover, the overall proximity of the source to the market would reduce the length of ordering cycles, in turn enabling companies to respond to changes in the market faster and more efficiently.
For American factories, this might mean not only that they need to make some investments in training and perhaps stepping up capacity, but they’ll also need to connect with new customers. The recent 2014 U.S. Manufacturing Summit might be an example of the kind of innovative approach that could be needed to get from a trickle of new manufacturing jobs to the torrent we keep expecting.
In the meantime, if you need support with your Indramat or Indradrive controls, drive, and servos, we’re the people to call. Put our number into your phone so you’ll have it when you need it.