U.S. manufacturers could benefit from Wal-Mart reshoring decision

January 17, 2013

U.S. manufacturers have welcomed the news that Wal-Mart is intending to purchase $50 billion worth of domestically produced goods, adding to the belief that the manufacturing revival is picking up speed.

According to Time magazine, the announcement that the retail giant is seeking to rid itself of a long-held perception that all of its goods are made in China has strengthened the argument that U.S.companies are willing to trust in the commitment to quality management in manufacturing, with “made in America” now becoming a domestic call to action.

This decision has even drawn support from the First Lady, with Michelle Obama reportedly seeing it as a vindication for the strength of the industry, although it should be noted that the Bentonville-based company isspreading this investment over a period of 10 years.

There have been a number of notable wins for U.S. manufacturers in the last few months, many of whom are seeing their commitment to lean enterprise paying off. Both Apple and General Electric have made no secret of their desire to further a manufacturing renaissance in the country, and a recent discussion of the industry in Washington, D.C. hosted by the Brookings Institution revealed that the attraction of manufacturing offshore was steadily losing its luster.

At the core of the “reshoring” trend is the issue of the supply line and the costs of maintaining a production facility in a country where English may not be the first language. When companies began manufacturing their products in overseas facilities, one of the prime factors in doing so was the relatively inexpensive cost of labor.

However, according to the Globe and Mail, this is now considered to be an “old school” method of production. Wages have been on the rise in China for some time, and while the country can still count on the support of a global marketplace for some manufactured goods, American companies have become increasingly aware of the talent that sits on their doorstep.

For some industry analysts, manufacturing in the U.S. has been making steady, if not spectacular, progress in the last 18 months or so. Despite concerns over the fiscal cliff, consumer spending has continued to rise and associated industries such as the automobile and housing markets have also shown considerable resilience as part of the slow pace of economic recovery.

With this in mind, manufacturers can afford to be cautiously optimistic, and with a company the size of Wal-Mart ready to embrace the stars and stripes instead of the Red Dragon, the industry appears to have a bright future.