Recently a question was posted in the “Machine Design” forum asking “How can America get the manufacturing back from China?”
I pose the question…why did America’s manufacturing move to China and Mexico, and can we ever get it back?
Here are my thoughts:
As more and more companies move to outsource manufacturing offshore looking for short term gains in labor rates what may be the long term consequences of these moves?
As shareholders demand a return on their investments, CEOs and CFOs look for ways to be profitable, after all this is how and why companies stay in business.
Mistakenly believing that labor per unit (LMPU) is the only factor to consider, and all other things being equal, many companies turned to lower labor rates in developing countries, with deficient environmental policies, safety standards, and often low product quality and substandard controls.
Recent examples are all around us, lead in paints, inferior steel, disease outbreaks in imported fruits and vegetables, staggering increases in emissions from these developing countries and rampant pollution.
Most of the companies’ leaders do not have technical backgrounds and do not realize that the problem of expensive labor could be solved here at home with automation, and the associated increase in quality that is inherent with automation. Instead they focus on short term payback, and are further deterred from an automation solution because of the high initial development and installation costs.
Only after companies make the move offshore do they start to realize all the overlooked factors and start to insist on changes.
Unfortunately these companies are no longer in the United States so there is no recourse when trademarks, copyrights, patents, and just about all other intellectual property protection laws and rules are of no consequence to foreign governments who see this as an opportunity to increase their own standard of living. Who can blame them?
They have learned manufacturing processes and assembly techniques. They can maximize profits using the same cheap labor Americans were hoping to exploit and in the end get further gains by not having the constraints from environmentalists, labor unions, quality standards and regulations, nor do they really have to give back anything to the “American” company who showed them the technologies to start with.
So long term American greed, limited technical understanding, and short sightedness is the root cause of the decline of Americas manufacturing resources.
We did this to US!!