MADE IN AMERICA
The BOSS Magazine|July 2020
Bringing manufacturing back from overseas sounds great, but it's not easy
Damien Martin

At one point, Ford’s assembly line in Detroit was cranking out a Model T every 24 seconds. That was a long time ago. Just as that assembly line was a symbol of American manufacturing prowess, the city of Detroit’s 2013 bankruptcy filing was a symbol of how much things had changed. Especially in the wake of the 2008-10 Great Recession, domestic manufacturing has given way to outsourcing in other countries. China, of course, is where most of those jobs have gone, though it’s not the only place. Supply chain disruptions in China and distrust in the country’s handling of the COVID-19 pandemic have spurred renewed calls to make the “Made in America” label much more commonplace. Achieving that, however, is a complex undertaking.

LABOR PAINS

There were reasons those domestic manufacturing jobs went overseas in the first place. The biggest is cost. Labor is cheap pretty much anywhere else, especially in Asia. Production costs, too. Companies want to maximize profits, and if they can make their product for less, and they can sell it at a price that will move units, they make money. American workers are going to demand more pay and benefits, which increases production costs. Increased production costs mean higher prices for the consumer. A whole lot of people have to buy into paying more. At a time of recession, that’s a tough sell, just as it was in 2008.

For manufacturers who see significant supply chain problems, that extra cost might be worth the stability and having a much clearer picture of when inventory will be ready. But for others, there are other places where labor is cheap. Vietnam, for example, is right next door, and companies are already moving production there from China. The population of Vietnam is a fraction of China’s, so it’s not a solution for every manufacturer. But there’s also Thailand. And India. The list goes on.

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