The New Insourcing Boom

[21cExp]

I mentioned this article in the 'Slow Cargo Van Freight?' thread, but see it as a separate topic--an encouraging one at that--that perhaps deserves it's own thread.

The Insourcing Boom is a very interesting article about the growing trend of taking manufacturing--that has been outsourced over the last decade to countries all over the world--and returning it to the United States.

Outsourcing, says Jeffrey Immelt, is quickly becoming “outdated as a business model...”

Charles Fishman, the author of the article, was interviewed on the radio this afternoon, and the whole thing just seemed so logical, so right, that it was quite encouraging, really. I realized how much that sense of encouragement is needed these days, a positive potential, and just how lacking it has been for way too long.

I think the trend of bringing manufacturing back into the States can only be a good thing for Just-In-time inventory and the world of Expediting.

 

[cheri1122]

I commented in the 'Slow van freight' thread, but you're right: this is excellent news!
And not just for expediters, either: when American manufacturers understand that the people who actually make the products just might have some valuable input into the process, everyone benefits, from the makers to the end users. The 'us vs them' mentality is great for sports, but in building something, anything, it's counterproductive - cooperation and teamwork is the way to succeed.

 

[ATeam]

I think the trend of bringing manufacturing back into the States can only be a good thing for Just-In-time inventory and the world of Expediting.

The article you cited is encouraging indeed, not only for expediting but for America at large. But that is not to suggest that expedite owner-operators can sit back and wait for the good times to roll.

This isn't the industry of added value via the pay phone any more. Expedite carriers can expand their operations very rapidly in response to shifting trends. New players can enter too. See: CRST Expedited will be hiring at least 50 drivers in its December hiring event.

Enjoy the good news, yes. Hope that the insourcing trend continues, yes. But stay on your toes too. The marketplace is competitive, costs are not decreasing and margins are thinner than they used to be.

 

[Rocketman]

If this does become a trend...and, in time, I think it will... there is a benefit that was never mentioned in that article. Those re-created jobs will also re-create more people with money in their pockets to buy goods from other industries which, in turn, will create more jobs.

It is encouraging. I can only hope that it does become a fad. I also hope that Americans can see what we have done to each other by purchasing foreign products. I hope that there is a growing awareness of exactly which products and companies are coming back to US soil. I hope that the support for those coming back is so overwhelming that these re-created jobs have no hope of keeping up with the demand.

I have a friend at home who owns a lumber/hardware store. He told me once that he hoped diesel fuel prices would go to $10/gallon. His reasoning? He wanted the transportation costs to so outweigh the labor costs that he could buy a box of nails from some guy with a machine set up in his garage, around the corner, cheaper than the Chinese could ship 'em in. His theory may have been a little radical, but there was merit also.

I've always been a Maytag fan. But, I'm feeling the need for some GE stuff these days!

 

[21cExp]

Man, wouldn't that be nice; if conditions were created that allowed and encouraged small local manufacturing and groceries and pharmacies and haberdasheries, etc to successfully compete with the chains and big box stores.

 

[Rocketman]

Man, wouldn't that be nice; if conditions were created that allowed and encouraged small local manufacturing and groceries and pharmacies and haberdasheries, etc to successfully compete with the chains and big box stores.

Yep...but that kind of thinking just blows all of the "OH MY GOD, THE SKY IS FALLING, THE SKY IS FALLING, I TELL YA!!!!!!!!!" thinking completely out of the water

 

[cheri1122]

My favorite line:

But it was also the inability to see the total costs—the engineers in the U.S. and factory managers in China who can’t talk to each other; the management hours and money flying to Asia to find out why the quality they wanted wasn’t being delivered. The cost of all that is huge.”

Well, duh. Like the expert said: "All it takes is a couple 747s to get product here in a hurry, and there goes the savings."
Articles like this make me wonder about all the pro business sentiment we hear all the time - business, per se, isn't terribly inspiring, sometimes. So it's good to know that they can learn from their mistakes, and make us proud of American industry again.
Now, if they'd just insist that every consumer product be dirtied and cleaned before they call the design finished, [because some nooks & crannies are impossible to clean!] what more could we want?

 

[Rocketman]

I had a small taste of that lack of communication in a very small business my brother and I had for a couple years. It was amazing how hard it was to get information to and from China, and to actually get the product over here was a huge problem. We found a small local shop that had invested in some very modern equipment. It was amazing how much the quality, the fit, the finish improved. It was also amazing how competitive a well managed, very modern and NOT "top heavy" local shop could be. I could see the possibilities back then....'05-'06 ish.

 

[21cExp]

In the interview this afternoon Fishman talked about being at the Louisville plant and how when the product was assembled in China from outsourced parts, then shipped to the US, it would take five weeks just to get here in containers across the ocean. He asked how long it takes now, and the foreman pointed overhead to the conveyor full of dishwashers and said "nineteen minutes".

 

[21cExp]

They had a sidebar piece too, with American Giant, in San Francisco, who makes "the greatest hoodie ever made", and how amazing it is that clothing can actually be made here in America that competes with foreign made product, simply because of attention to fabric, detail, and quality.

Here's the article in Slate that prompted the interview: American Giant: This Is The Greatest Hoodie Ever Made.

When interviewed, Bayard Winthrop, the guy who started American Giant, said they've paid strict attention to detail in the manufacturing process with an eye towards being able to scale up easily in size to larger manufacturing without losing quality.

I think that's where most "Small Is Beautiful" (economics as if people mattered) followers may begin to fail and lose sight of original intent and focus more on bottom line.

Maybe Winthrop can pull it off and end up large but still US based and quality sound.

 

[Rocketman]

As with any business, as the distance between the boardroom and the production line grows, the overall efficiency and the ability to manage and maintain suffers. According to the article in the op, GE seems to be doing a really good job of not only shortening that distance, but actually embracing an "all hands on deck" management style. I like it, I like it a lot. I've spent enough time in manufacturing to know first hand just how desperately that kind of thinking has been needed in American manufacturing. Given the resources and opportunity to perform, Americans are quite capable of competing.

 

[ATeam]

Yep...but that kind of thinking just blows all of the "OH MY GOD, THE SKY IS FALLING, THE SKY IS FALLING, I TELL YA!!!!!!!!!" thinking completely out of the water

It's not just talk for many people. I spoke two days ago with a commercial space HVAC contractor. His company is four people in size, down from the forty people he had working before the real estate crash, and he was one of the few in the area who remained in business at all. In that market the sky fell and there was no overstating the devestating impact. Not so long ago, General Motors went bankrupt. That too was a true crisis. In those days we saw expediting carriers evaporate into thin air and suppliers like Bentz get wiped out.

Globally, the Euro has been in trouble for some time and sky-is-falling talk is frequent. Yes, a positive case can be made, but for the Greeks who are shipping their children off to live with relatives because they cannot afford to support them at home, the positive case would seem far off.

Attitude is important and optimism is usually more productive than pessimism, but don't let the desire to think positive get in the way of accurate perceptions. There is always a positive and negative case to be made. Both must be equally considered when plotting one's course.

Also, no trend should be viewed in isolation. As great as an insourcing trend may sound, and with the hope this trend may inspire, never underestimate the government's ability to wreck a good thing.

There are companies out there right now that would like to hire more people but they are holding off while they wait to see what the true cost of a new hire will be under the new health care regulations.

 

[moose]

Well, my Chevy in Minnesota have only one LARGE sign on it, it reads : "BUY AMERICAN".
when i go shopping i PAY close attention to how i spend my money.
it's all up to the individual to choose in which country we spend our money.

 

[OntarioVanMan]

big difference between assembled in America as to made in America.....I can think of NO vehicle that is 100% American made....all have some kind of foreign content

BTW..I was at Ford Flatrock....they were on shutdown for.....drumroll....ANOTHER version of the Fusion brought back from MEXICO..... now the 4-6 and 8 cylinder are assembled in USA...Brook Park over in Cleveland does 1 model as well...don't know if its the 6 or the 8 version...

 

[layoutshooter]

big difference between assembled in America as to made in America.....I can think of NO vehicle that is 100% American made....all have some kind of foreign content

BTW..I was at Ford Flatrock....they were on shutdown for.....drumroll....ANOTHER version of the Fusion brought back from MEXICO..... now the 4-6 and 8 cylinder are assembled in USA...Brook Park over in Cleveland does 1 model as well...don't know if its the 6 or the 8 version...

They are only repairing the mistakes made in Mexico. They have not yet brought back the production to the US. There are talks about doing this. So far 8000 cars have needed major work at Flatrock before they could be released for sale.

My brother is one of the inspectors there. As of last week he was still on that project.

 

[OntarioVanMan]

They are only repairing the mistakes made in Mexico. They have not yet brought back the production to the US. There are talks about doing this. So far 8000 cars have needed major work at Flatrock before they could be released for sale.

My brother is one of the inspectors there. As of last week he was still on that project.

Interesting....the guy I talked to said they were retooling....

 

[layoutshooter]

Interesting....the guy I talked to said they were retooling....

They are. Normal retool at this time of year. Ford is talking about bringing the Fusion back to the US due to the extreme quality problems in Mexico. One problem is that it many not get that much better here. Mazda pulled out of the Flatrock plant due to the quality problems they have there.

Several of the cars made in Mexico were so bad they had to be dismantled and redone at Flatrock.

 

[hossman2011]

As more states legislate themselves to be Right To Work states you will see more manufacturing start to return...

 

[skyraider]

More on that subject................How Can Wal-Mart Sell a Denim Shirt for $11.67? - Institute for Global Labour and Human Rights

 

[guido4475]

I mentioned this article in the 'Slow Cargo Van Freight?' thread, but see it as a separate topic--an encouraging one at that--that perhaps deserves it's own thread.

The Insourcing Boom is a very interesting article about the growing trend of taking manufacturing--that has been outsourced over the last decade to countries all over the world--and returning it to the United States.

Outsourcing, says Jeffrey Immelt, is quickly becoming “outdated as a business model...”

Charles Fishman, the author of the article, was interviewed on the radio this afternoon, and the whole thing just seemed so logical, so right, that it was quite encouraging, really. I realized how much that sense of encouragement is needed these days, a positive potential, and just how lacking it has been for way too long.

I think the trend of bringing manufacturing back into the States can only be a good thing for Just-In-time inventory and the world of Expediting.

Someone needs to share this with Whirlpool!

Hats off to Ford, for bringing the Ford F-650 and 750 back and having it made in Avon Lake, Oho, from mexico.