U.S. manufacturing sector is on the rebound

Pasadena Star News
By: Cynthia Kurtz
Posted: 01/09/2013

After World War II the United Sates economy began to hum as demand for products - from autos to baby bottles - boomed and nearly everything was proudly stamped “Made in America.” At its peak in 1979, American manufacturing employed 19.6 million people. Then companies started to move manufacturing “off-shore.”

The conventional wisdom was that if it wasn’t perishable or required highly skilled labor, then move it. Companies found they could more than cover increased transportation costs by taking advantage of foreign labor costs that were a fraction of American costs. New regulatory requirements were forcing plants to undergo expensive overhauls to meet new safety and environmental standards, so why not build those plants somewhere with minimal regulatory oversight.
The off-shoring trend accelerated in 2000. According to Charles Fishman in his article The In-Sourcing Boom, the U.S. "lost jobs seven times faster between 2000 and 2010 than it did between 1980 and 2000."

The pain of these job loses hit the San Gabriel Valley hard. In 2000, almost 95,000 people were employed in manufacturing in our region. Today that number has fallen to 55,600. Many observers predicted that America had lost those manufacturing jobs forever.

Now, however, trends show an upswing in not only creating new manufacturing jobs but bringing back to American shores jobs that had been out-sourced. There are many reasons for this change.
Consumers are demanding product quality and on-shore manufacturing makes it possible to closely monitor quality and consistency of products.

Increased oil prices have increased the costs of transportation. Those container ships from China burn a lot of fuel oil.

Equally important is the need to be able to count on the supply chain and product pipeline. The recent shut down at the Port of Long Beach, as well as the pending strike at east coast ports, are good examples of the vulnerability of off shore manufacturing to disruption.

Technology is changing at an ever increasing pace. Clustering manufacturing near research and development facilities enhances innovation and increased the ability to respond quickly to consumer needs.

Protecting intellectual property is a huge problem for companies. On-shore facilities face fewer theft risks.

Companies are thinking green. Customers want green processes and products. They reduce costs with less waste from specialized packaging and by eliminating long distance shipping costs.
Lastly, political instability in many of the countries that offer lower wages can’t be significantly managed.

The federal and state governments are responding with policies that incentivize in-sourcing. In 2011, Congress passed the Reshoring Initiative to promote investment in emerging technologies. In September 2012, California passed Senate Bill 1128 authored by Senator Alex Padilla. The bill allows sales and use tax exemptions on the purchase of manufacturing equipment in the advanced manufacturing sector.

It all adds up to more good paying jobs here at home and a lot more products with the “Made in America” stamp.