Archive for the ‘Economy’ Category

USA Today reported yesterday, “A small but growing band of US manufacturers – including giants such as General Electric, NCR and Caterpillar- are turning the seemingly inexorable offshoring movement on its head, bringing some production to the US from far-flung locations such as China. Others that were buying components overseas are switching to US suppliers. Ford Motor said Wednesday that it’s bringing nearly 2,000 jobs to its U.S. plants by 2012 from suppliers, including those in Japan, Mexico, and India.”

Given recent news about rising costs of manufacturing in China, along with issues regarding quality, lead time, and other not so obvious problems regarding the theft of intellectual property, including counterfeiting, an increasing trend of onshoring could be in the making. Shipping, quality, and other problems related to logistics all add cost, many of which had been hidden and overshadowed by cheap labor, but are becoming increasingly evident as labor rates go up and more problems are brought to the surface. Offshoring is no longer seen as the be all, end all panacea for reduced manufacturing costs, which is great news for the U.S. economy.

The original USA Today article is here.

The lure of cheap labor will continue to be attractive to manufacturers, so at some point it will balance out. For right now though, it’s great news to at least see the pendulum start to swing back the other way after so many devastating job cuts in recent years.

This AP article offers some encouraging signs for the manufacturing sector:

http://hosted.ap.org/dynamic/stories/U/US_ECONOMY?SITE=CAVIC&SECTION=HOME&TEMPLATE=DEFAULT

It’s interesting that President Obama named Ron Bloom the senior counselor for manufacturing policy yesterday. You can read about it here. Prior to this appointment, Mr. Bloom was a senior adviser to Treasury Secretary Timothy Geithner and was part of the auto industry task force since February.

In naming Bloom to this position, President Obama is following through on one of his campaign promises to re-vitalize U.S. manufacturing and putting some resources to focus on this critical issue could be another step in reversing the slide that we’ve experienced for such a long time. Time and results will tell how effective this announcement will be.

After all the dreary news about layoffs, bankruptcies, and plant shutdowns, I saw a NY Times article the other day showing U.S. manufacturing growth after 18 months of decline.

In an index in which a number above 50 indicates growth and below 50 indicates contraction, the Institute for Supply Management in its survey of factories and industry had a manufacturing index of 52.9 in August, up from 48.9 in July.

Indeed, this is great news and is yet another one of those nuggets pointing to recovery and an upturn in the economy.