Today, I am in California visiting an Asian prospect that for decades has made components in China and Thailand to supply their global clients. Now, they have built a US factory in sunny California and they are in the midst of a massive "localization" campaign buying US components to serve their clients. They are switching all their production to the US. I asked this astute client, why are you leaving the incumbent Asian vendors that have served you? Here are the four reasons they are moving production to the US and closing out the Asian vendors.
1) USA is Price Competitive. Robotics and automation eliminates labor differentials and improves the quality since the parts conform to specifications consistently--clients crave uniform parts. When I first bought Marlin Steel, we hand bent every wire and welded each weld one at a time. In 1998, we were dangerous, dirty and boring. Think Charles Dickens factory. Fast forward to 2015, we have massive robotics and automation investment (over $4 million!) paying off so my employees are not burdened with unsafe, unclean, repetitive, mind-numbing activities. Now US manufacturing, like Marlin Steel, employees are in clean factories driving state of the art robots and technology that optimize production and eliminate the value of cheap labor costs from Asia. US factory employees are given tools that super charge their effectiveness so our rich pay and generous benefits ($77k/year is average for US factory employee) is overwhelmed by the productivity of the US worker.
2) Purchasing Managers and Plant Foremen hate drama. US Manufacturers provide a drama free relationship. Quality parts on time. Dreamy for demanding customers. Purchasing managers get their walking papers if they pick inconsistent and weak vendors. Buying from US factories reduce the risk and protect purchasing manager job security.
3) R&D Warranty Issues--Stuff happens. The client has a challenge with a component that needs to be addressed. Working with a US manufacturer gets new ideas implemented fast. Problems crop up and it is easier to work with someone in your time zone and speaks your language so topics are addressed fast.
4) Port Congestion in Western Ports. Importing products by boat is cheap unless the ports are closed or stuck in quicksand because of labor issues. My client was infuriated they had to fly products in from Asia and forgo "cheap" boat freight since they needed timely deliveries. US Factories have cheaper routes to the domestic market by rail or truck. Port snafus will not halt US on time production.
Buckle up for the US Manufacturing engine to roar!