Apple announcement is tip of manufacturing iceberg

December 11, 2012

The announcement by Apple that it was intending to produce one of its iconic pieces of consumer technology in the U.S. may have raised a few eyebrows, but it could be the tip of the manufacturing iceberg.

In a recent interview with National Public Radio, the advantages of making stuff in the U.S. were extolled by Rich Calvaruso, head of the Appliance Division at General Electric and a noted believer in lean enterprise. Four years after he was told by the company to find a more efficient way to build a dishwasher, Calvaruso managed to reduce the time it takes to build the appliance by 33 percent without the need to outsource the work overseas and by just using a degree of common sense.

GE is one of a number of U.S. manufacturers that believe insourcing is the way forward. Rising costs of production in China was one reason why GE decided that Appliance Park in Louisville, Kentucky, was to get an $800 million investment, turning it from a memorial to manufacturing to an essential tool in the production process.

Bringing manufacturing jobs back home relies on a number of seemingly disparate but essential factors. Irrespective of the perception that total quality management in manufacturing overseas is not quite as stringent is one element, but the cost of running a production line in a non-domestic setting can be huge.

According to a recent article in The Atlantic, oil prices are three times higher than they were in 2000, making shipping costs more expensive, while natural gas is four times more costly in Asia than in the U.S. Wages in China may not be as high as a domestic workforce, but they have increased by five times in the last 12 years and they are expected to rise by 18 percent per year for the foreseeable future.

Having a domestic assembly line that manufactures the entire product as opposed to just separate parts is more cost effective and, ultimately, more efficient. All of these factors begin to add up, and industry analysts are confident that a bright future for manufacturing is on the horizon.

"Because of the recession, we're not quite at the highest dollar value the country's ever produced in manufactured goods, but we're very close," wrote Charles Fishman in The Atlantic. "The notion that the U.S. will never make anything again is dramatically overstated. I think smart companies will see it isn't an act of patriotism or charity, it's smart business to make stuff here."