It turns out that some companies are discovering the problems with manufacturing their goods in China. Fortune Magazine reports that some companies have chosen to move manufacturing back to the United States due to rising costs and supply chain problems.
One big issue I have is paying for quality. When I pay $100 for a widget, I expect it to be a good quality one. But when the widget is made with cheaper labor, I have a hard time accepting the price.
But if you consider that it costs less to make a widget in a developing country, you basically are working towards building a profit. But when that widget does not meet the quality expectations of the consumer, word gets around. Soon, you’re not selling widgets. And if you stamp a warranty on it, you’re losing money by replacing the widget because it falls short of customer expectations.
Additionally, because many things sold in the US are now made in China, the cost to manufacture those items is going up. There is more demand for industrial fuel (essentially, fuel to power the manufacturing plants). That fuel is essentially the same fuel that we compete for to fuel our manufacturing plants, homes, and vehicles. And likewise, it’s also the same fuel that’s needed to transport the manufactured goods from China to the United States.
There is also more demand for higher wages. Like other countries that have made goods for us, the folks working in the plants are starting to get paid more. They’re driving now. They’re buying more consumer goods. They’re westernizing. So they’re going to demand more money.
Finally, it’s becoming less efficient to manufacture overseas. Not only does it cost more to produce and transport, but it also costs more in lost revenue. One company, Regal Ware, discovered that it wasn’t making money when it could not supply its products to consumers, due to holiday shut downs in China. As a result, it chose to start making cookware in its hometown of Kewaskum, Wisconsin. Essentially, it took control of its supply chain.
Although the price of an American-made product may still be higher than a similar one made in China, there are other concerns to think about when we continue purchasing and manufacturing goods overseas. Perhaps now is a good time to put hard-working Americans back to work.