The Return of American Manufacturing

Blog Post | February 12, 2013 - 12:00 pm
By Daniel Trombley, Senior Industrial Analyst

There’s been a lot of talk lately about the resurgence of manufacturing in America. Whether you call it reshoring, backshoring, or insourcing, manufacturing companies have been bringing product manufacturing back to the U.S. from overseas, when just a few years ago it was taken for granted that U.S. manufacturing was in an inexorable decline. Over the past year, this topic has been covered by The Economist, The Los Angeles Times, The Financial Times(registration required) and the White House’s National Economic Council.  Recently Charles Fishman at The Atlantic Monthly has weighed in with an article titled  “The Insourcing Boom,” where  he describes the return of appliance manufacturing to General Electric’s Appliance Park industrial park in Louisville, Kentucky, a facility we’ve recognized for using energy efficiency to create jobs.

Fishman doesn’t discuss energy efficiency directly, although he lists “lean manufacturing” as one way companies are cutting costs though insourcing. Lean manufacturing, a method to eliminate waste from industrial processes, doesn’t always explicitly include energy waste, but it turns out that reducing other wastes in a process almost always results in energy savings. At Appliance Park, lean manufacturing was used to redesign the entire manufacturing process for a dishwasher, allowing them to reduce labor required by 35%.

While reducing the required workforce doesn’t seem like a great way to bring back American manufacturing, leadership at Appliance Park recognized that the unneeded staff represented a valuable resource they could use elsewhere. Management was able to use this skilled and trained workforce to design and build additional parts of the dishwasher instead of buying those parts from overseas. It’s this kind of thinking could help reverse the outsourcing trend. As Fishman notes, “that’s how the outsourcing cycle starts to turn. Once you begin making the product itself, you get the itch to make the parts, too.”