American companies looking to return manufacturing operations to U.S.

February 15, 2012

Big U.S. manufacturers moved their production out of the country at too quick of a pace over the past decades and now have seen a competitive advantage in building their operations back in America, top executives said at a Washington, D.C. event organized by General Electric.

Reuters reported that the chase for lower-paid workers drove the migration, leading to a drop in employment in the U.S. manufacturing sector. However, big companies, including Boeing Co. and General Electric Co. are now finding that business strategy is shifting, as the benefit of lower wages can be offset by higher logistics and materials costs.

"We, lemming-like, over the last 15 years extended our supply chains a little too far globally in the name of low cost," Jim McNerney, chief executive of Boeing, said at the event. "We lost control in some cases over quality and service when we did that, we underestimated in some cases the value of our workers back here."

The event was organized to promote the competitiveness of the U.S. economy. Reuters reported that a major theme, as noted by high-level executives for major corporations, was that American companies needed to focus on generating jobs domestically.

"You are going to see more (manufacturing) come back to the United States, and that's in part for business reasons and in part because we want to be good citizens," McNerney said at the event.

CEOs said they were looking for workers in the U.S., as some 600,000 U.S. manufacturing jobs are going unfilled because companies are unable to find applicants with the skills needed to perform them, according to a study by the Manufacturing Institue and Deloitte.

The study noted that there needed to be a renewed investment in educating Americans in the appropriate fields to help fill these jobs.

President Barack Obama emphasized the need for education of workers for the sector, as he outlined a new manufacturing strategy in his administration's FY2013 budget, according to The Boston Globe.

The newspaper reported that the President proposed a 19 percent increase in manufacturing research, and the budget would also provide tax incentives for manufacturers to keep jobs from going overseas. This would help to encourage investment in communities that were initially affected by plant closures.