Once Made in China: Jobs Trickle Back to U.S. Plants
From The Wall Street Journal:
When Bill Good was a student at Auburn University in Alabama in the 1980s, he worked at a company producing American-made fitness equipment—a business eventually wiped out by low-cost imports from Asia.
He later worked at Char-Broil LLC, a Columbus, Ga.-based maker of grills, where he was involved in a decision in 2004 to move production to China from the U.S., an episode he recalls as "extremely painful." It was part of a vast tide of similar decisions that helped reduce U.S. manufacturing employment by about six million jobs, or one-third, between 1997 and 2010.
Last September, Mr. Good finally got to reverse a tiny part of that flow. As a plant manager in Greenville for Whirlpool Corp., he brought back production of that company's KitchenAid hand mixers, which for the previous six years had been made by a contractor in Huizhou, China, near Guangzhou.
When Whirlpool decided to assemble the product in Greenville again, "there were a lot of high fives going around, that's for sure," Mr. Good says.
The net gain in U.S. jobs at Whirlpool? About 25.
The hand mixer line illustrates the promise—but also the limitations—of a trend that has been growing over the past two years: the "reshoring" of some manufacturing work that was "offshored" to low-cost producers like China in the past few decades. Producing in Asia "is not as big of a no-brainer as it was 10 years ago," says Mr. Good. Whirlpool is considering bringing back production of other small appliances.
Yet the return of some production to the U.S. by Whirlpool and scores of other companies isn't creating a huge number of jobs. Most of the parts for the mixers—including the motors—are still made in China because Whirlpool couldn't find U.S. suppliers that would make them cheaply enough. Plastic parts for the mixers are being made in the U.S.—but partly on equipment newly purchased from China.
Global companies still are expanding production capacity in Asia to serve those fast-growing markets. But more are questioning the logic of trying to meet North American demand from Asian factories, says Dr. Simchi-Levi. Companies are moving toward a regional-manufacturing model, he says, in which Asian plants serve Asian customers, North American ones serve Americans.
Products more likely to be reshored include heavy or bulky items for which the shipping costs are high in relation to the price, such as heavy machinery, says Cort Jacoby, a supply-chain expert at Hackett Group, a consulting firm. Other candidates for reshoring include expensive items subject to frequent changes in consumer demand for certain colors or styles, such as high-end clothing, home furnishings or appliances like Whirlpool's mixer, Mr. Jacoby says. Makers of products for which safety is a paramount concern—such as food or baby products—might choose to make them at home so they can closely monitor all of the suppliers of parts or ingredients, he says.