For the past two decades, one of the primary sources of concern, debate, and outrage throughout the manufacturing industry has been related to the practice of outsourcing. While domestic operations have emphasized product design and idea generation, production operations have been shifting overseas to take advantage of cheaper labor, weaker environmental regulations, and more accommodating tax laws. But this shift is now showing strong signs of reversal. And there are several trends, including these three, that are now attracting operations back to American shores and potentially keeping manufacturing jobs here rather than sending them abroad.
20 years ago, the cost of living in China was significantly lower than it is today. So workers could accept far lower salaries and U.S. companies could stand to reap huge costs savings by shipping these jobs overseas. But now wages in China are rising, living costs are also rising, and sophisticated and affordable robotic devices are becoming increasingly available to local manufacturing facilities. These three shifts are reducing the labor cost incentive of offshoring, though of course, the increasing use of robotics isn’t necessarily a boon for domestic job production.
At one point, an entire expensive production line had to be designed, built and implemented before a single 50 cent cog or washer could be produced. But with the rise of 3D printing and highly specialized, technology-based production capabilities, once-complex operations can be scaled to meet the needs of smaller clients. Capital outlays are lower, smaller orders can be accepted, and a larger number of customers can be served with much lower initial investments.
Energy intensive industries that rely on huge amounts of fossil fuels to stay in production have seen their expenses drop as a result of the recent rise in shale gas production. The boom of shale gas extraction through the use of hydraulic fracturing technology (also called fracking), has dropped manufacturing costs across the board. Unfortunately, this technology has not been proven to be safe or environmentally sound, and many questions have arisen regarding its impact on responsible land use, public water supplies, and the health of local communities. But new biological fuel sources and the increasing efficiency of solar technologies are also helping to cut manufacturing costs and lure operations back to the U.S.