Made in the USA: More Consumers Buying American

Chris Rank | Bloomberg | Getty Images

A curious thing is happening among American shoppers. More people are taking a moment to flip over an item or fish for a label and ask, is it “Made in the USA?”

Walmart, the nation’s largest retailer, earlier this year announced it will boost sourcing of U.S. products by $50 billion during the next 10 years. General Electricis investing $1 billion through 2014 to revitalize its U.S. appliances business and create more than 1,500 U.S. jobs.

Mom-and-pops are also engineering entire business strategies devoted to locally made goods — everything from toys to housewares. And it’s not simply patriotism and desire for perceived safer products which are altering shopping habits.

The recession, and still flat recovery for many Americans, have created a painful realization. All those cheap goods made in China and elsewhere come at a price — lost U.S. manufacturing jobs. A growing pocket of consumers, in fact, are connecting the economic dots between their shopping carts — brimming with foreign-made stuff — and America’s future.

They’re calculating the trade-offs of paying a little more for locally-made goods.“The Great Recession certainly brought that home, and highlighted the fact that so many jobs have been lost,” said James Cerruti, senior partner for strategy and research at consulting firm Brandlogic. “People have become aware of that.”

“‘Made in the USA’ is known for one thing, quality,” said Robert von Goeben, co-founder of California-based Green Toys. All of their products from teething toys to blocks are made domestically and shipped to 75 countries.

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Made in America, Again

Bringing manufacturing jobs back to the U.S. is politically savvy and can make economic sense.

Offshore labor: A worker in a Foxconn factory assembles consumer electronics for U.S. markets.

At a dinner for Silicon Valley big shots in February 2011, President Obama asked Steve Jobs what it would take to manufacture the iPhone in the United States. Apple’s founder and CEO is said to have responded directly: “Those jobs aren’t coming back.”

In December, Apple reversed course, saying it planned to assemble a line of Mac computers in the U.S. With that, Apple joined a wave of companies that say manufacturing in this country makes sense again. Companies that say they’ve brought back jobs include General Electric, Michigan Ladder, and Wham-O, which in 2010 hired eight people to make Frisbees in Los Angeles instead of China. An MIT study in 2012 found that 14 percent of companies intend to move some manufacturing back home.

The idea is known as “reshoring.” Although Chinese wages are a fraction of U.S. labor costs, rising shipping rates, quality problems, and the intangible costs of being far from headquarters all add up. That’s why some companies have begun to rethink the manufacturing equation.

MIT Technology Review interviewed Harry Moser, head of the Chicago-basedReshoring Initiative, about the trend. Moser, a former industry executive whose family has been involved in American manufacturing for a century, says he grew up “experiencing the glory of U.S. manufacturing.” He created the initiative to help companies compare the real costs of manufacturing at home and abroad, and to track the experiences of those who are returning.

Why are people talking about reshoring all of a sudden?

It’s actually been happening over the last few years. The obvious answer is that Chinese wages are doubling every four years. The consultants who five years ago were helping people offshore are now helping them inshore. And then you have President Obama making a big deal over how to reduce imports and start making stuff again.

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Seven Reasons Outsourced U.S. Bank IT Jobs Are Heading Back Onshore

Some bank IT jobs that have been outsourced for the past 10 years or so are coming back stateside, at least according to one expert. “A number of banks have told me they’re pulling back work from offshore, particularly from India but not only India,” says Harley Lippman, founder and chief executive of Genesis10, an IT consulting and staffing firm based in New York. “India is still the epicenter of IT work for major banks, although some work has gone to China, Eastern Brazil and other locations.”

Lippman doesn’t have numbers to back this observation. “I’m gathering that as we speak,” he says. “A lot of people are interested in that.”

Lippman’s own company has benefited from this trend, although he declined to name any bank clients. His firm is hiring in Troy, Michigan; Atlanta (where it just opened a new facility); Grand Rapids, Mich.; and Kansas City, Mo. “That’s all driven by bank client demand,” Lippman says.

Some banks are bringing the work back in house, but the majority are finding an onshore outsourcing provider, Lippman says. “In all banks there’s head-count pressure; there continues to be cost pressure, there’s pressure on execution and delivery for all the major banks,” he says. Outsourcing offers variable costs and the flexibility to ramp up and down as the volume of work fluctuates.

Offshoring made sense 10 years ago, when a New York City programmer might have cost $100 an hour, versus $15 an hour for a worker with similar skills in India, Lippman says. “Today it’s very different, the world is more flat,” he says. “Jeffrey Immelt,” the General Electric chief executive, “said there’s no more cheap labor; I found that quite significant.” Inflation is over 20% in India.

Why are banks turning from offshoring to onshoring? Lippman offers several reasons:

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High hopes for jobs and TV’s ‘Made in the USA’

By Hal Weitzman in Chicago Financial Times
Much of Element Electronics’ factory in Canton, a suburb west of Detroit, is empty. But on a single production line, about 45 workers are assembling the first televisions made in the US by an American company in decades.

So far, it is a small operation, but Element’s attempt to bring TV manufacturing back from Asia to the heart of America’s rust belt is a powerful example of reshoring, the trend of jobs once outsourced to low-cost emerging economies being brought back to the US.

Reshoring is causing great excitement in the US. Companies such as General Electric and Caterpillar have been touted as high-profile examples of the trend. Since 2009 GE has announced plans to create 11,000 manufacturing jobs.

In an election year, reshoring has also become a potent political symbol, a counterweight to those who say the US is in decline or that current economic policies are not working.

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This Column Was 100% Made in America

A Hyundai ad that ran during Super Bowl coverage showed workers from the company's plant in Montgomery, Ala.

A Hyundai ad that ran during Super Bowl coverage showed workers from the company's plant in Montgomery, Ala.

By   Published: February 15, 2012

BLUE-COLLAR workers in fields like manufacturing — particularly when they make products on American soil — are again becoming a favorite subject for white-collar workers on Madison Avenue.

The trend was born of the economic worries that followed the financial crisis in 2008. Recently, it is gaining steam — appropriate, since the ads often use blasts of steam to signal something is being built — with proposals in Washington to offer incentives to encourage the location or relocation of factories in the United States.

“We continue to see very heavy emotional response to anything that would leverage against the bad economy,” said Robert Passikoff, president at Brand Keys, a brand and customer-loyalty consulting company in New York. Read more of this post

GE to Hire 5,000 U.S. Veterans, Investing in Plants

WASHINGTON (Reuters) – General Electric Co plans to hire 5,000 U.S. military veterans over the next five years and to invest $580 million to expand its aviation footprint in the United States this year.

The largest U.S. conglomerate unveiled the moves ahead of a four-day meeting it is convening in Washington starting on Monday to focus on boosting the U.S. economy, which has been slow to recover from a brutal 2007-2009 recession.

“We should have the confidence to act and to restore American competitiveness,” Chief Executive Jeff Immelt, a top adviser on jobs and the economy to President Barack Obama, said in a statement.

The U.S. unemployment rate — seen as the main barrier to a move vibrant recovery — fell to a near three-year low of 8.3 percent in January, helped in part by the manufacturing sector adding about 50,000 workers. Even with that improvement, 23.8 million Americans remain out of work or underemployed, which is keeping the economy a key issue heading into November’s presidential elections.

The world’s largest maker of jet engines plans this year to open three new U.S. aviation plants, in Ellisville, Mississippi; Auburn, Alabama, and Dayton, Ohio. After cutting headcount significantly during the recession — as did its major peers including United Technologies Corp and Caterpillar Inc — GE has added about 9,000 U.S. workers since 2009, and has already announced plans to hire another 4,500 people.

The Fairfield, Connecticut-based company, whose operations range from making loans to mid-sized businesses to manufacturing railroad locomotives, plans to discuss these moves at the Washington meeting. Boeing Co CEO James McNerney and Dow Chemical Co CEO Andrew Liveris are also scheduled to speak.

(Reporting By Scott Malone; Editing by Muralikumar Anantharaman)

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