Are Manufacturers Ready for a Return of Overseas Business?

A recent survey done by MFG.com  provides some positive signs that US manufacturing industry is making a comeback.  For years, jobs have been outsourced abroad to countries like China and India.  The financial advantages of cheap labor outweighed the convenience of sourcing jobs closer to home. But steady improvement in labor conditions abroad are starting to make domestic manufacturers more competitive on price, and some jobs are coming back home.

The Wage Gap is Closing

According to the survey, the average hourly wage of a worker in China has increased by nearly 700% in the last decade.  While the improved average hourly wage is still cheaper than what can be found domestically, it has served to begin to level the playing field.  Couple the closing gap in wages with the fact that orders can be turned around and shipped from the manufacturer to the end destination much more quickly domestically, and business is starting to trickle back to US shores.  In fact, of the manufacturers that responded to the MFG.com survey, 40% said that they have regained business that had previously been lost overseas.  Those numbers are both a reason for optimism and a little bit of anxiety.

Are Manufacturers Ready for a Boom?

One of the industries hardest hit by the recession was the manufacturing industry.  Mass layoffs were common, and as a result, the labor force has been forced to retrain and rejoin the workforce in different careers.  The issue that manufacturers could now face is a lack of qualified workers to fill positions needed.  As business slowly trickles back, so do jobs.  But it’s difficult for an individual to leave a steady paycheck to return to an industry that still hasn’t fully recovered — a much more uncertain situation.

What’s Next?

Over the course of the past several years, manufacturers have had to become more agile.  Whether that meant cutting the work force or reorganize their business processes to be able to take on smaller jobs while remaining profitable, the industry has managed to survive. But a labor force that was desperate for jobs seems to have moved on just as the demand for skilled labor seems to be rising.

Make no mistake about it; with the number of unemployed in the United States still in the tens of millions, there are plenty of individuals eager to rejoin the workforce.  Training those individuals might fall on the shoulders of the manufacturers themselves. But if business is returning, and the path to growth runs parallel to the need for more skilled labor, that might be an investment worth making for some manufacturers.


Are you a manufacturer that has seen a return of business previously lost overseas? Leave us a comment and let us know about it.