U.S. manufacturers have the future of the industry in their hands

December 17, 2012

There is a revival underway in U.S. manufacturing and, despite worries over a fiscal cliff and an apparent talent gap, industry leaders believe that the future of the industry is firmly back in domestic hands.

According to The Atlantic, its not even a revival but a full blown renaissance. Companies are bringing jobs and products back to the U.S., energy prices continue to drop and the American worker is proving to be not just committed to quality management in manufacturing, but a relative bargain when compared to the rising costs of overseas production.

A recent report by the Federal Reserve showed that manufacturing output had increased by 1.1 percent in November, the biggest gain in nearly a year, with a surge in motor vehicle output credited by economists for increased domestic production.

"This is an economy that still has a lot of slack and upside potential," said Robert Dye, chief economist at Comerica in Dallas, in an interview with Reuters. "There is a lot of dry tinder out there, the Fed has added to that with monetary policy and we have to get past the fiscal cliff issues to see if the dry tinder catches fire."

This potential can be linked to the desire to buy products made in America, hugely popular in overseas markets, and part of a growing domestic trend. There are a number of smaller manufacturers who are turning away from the seemingly traditional practice of outsourcing and compressing the supply chain into manageable local chunks.

Many of these have taken advantage of the boom in e-commerce, allowing businesses to produce goods either for themselves or for retailers who have no physical store to stock. Companies can operate a lean enterprise, but have their eyes on the logistics of local production, according to Business Insider.

"What most businesses do is that they don’t adequately monetize ‘soft’ costs involved with manufacturing in China," said Bayard Winthrop, CEO of American Giant, a California-based clothing manufacturer. "These are nuanced things like lead times, language issues and much more. You avoid the many pitfalls of doing business abroad."

Industry analysts have admitted that the last fifty years have been a rollercoaster for American companies. Even in the last five years, U.S. manufacturing has experienced peaks and troughs,  but the signs are there that it is ready to take advantage of the years of enforced lean enterprise and cement its global reputation.