American manufacturing is returning

The December 2008 issue of NASA Tech Briefs had an innovation editorial by Mitch Free, a serial entrepreneur that started the MFG.com website. That sites lets vendors like machine shops pay for placement in a database that lets global companies find suppliers. He has been in a good position to survey the worlds manufacturing economy. He points out that many manufacturing projects are returning to the USA. Due to our innovation and productivity, we are becoming a low-cost country to make things. There is a neat chart, (sorry the article does not seem to be online at this time) that shows why companies are sourcing vendors from the USA. Almost 25% say it is high fuel or shipping costs from China. 18% cite materials cost in China. 17% cite labor costs in China. 16% say it is delivery issues or instability of the supply chain. Two groups of 10% each cite either language or currency problems. 4% say it is adjusted value added tax rebates that have soured them on using foreign vendors. This is from a survey of 803 respondents.

Mitch points out that the price of a shipping container from Shanghai to Los Angeles has doubled from $3000 to $6000. He points out that cost is not necessarily the driving factor in companies returning their manufacturing vendors to the USA. The agility and ability to make changes are also key, as is the fact that many ships have cut their speed by 20% to save fuel. And get this, for China to become part of the WTO (World Trade Organization) they will be forced to adopt income taxes. In addition Mitch sees many UK buyers turning to the US since the dollar is so cheap compared to the Pound or the Euro. Maybe America will once again shine as a country where people make things, instead of a country where the financial elite just loots the economy.