Today I went to Elk Grove, Il., which is the largest business park in North America with more than 3,600 businesses squeezed into about 5.4 square miles, according to its entry in Wikipedia.
I had never been to the business park, I try to avoid anything north of Grand, but I was there for one of my freelance assignments. I met one of those business owners and when the story I write comes out on his company and employees I’ll link to it.
But what blew me away was all the bustling activity up in Elk Grove and the first-hand discovery of what I think is a minor miracle – manufacturing still exists in America. In fact, it’s making a comeback!
Manufacturing Comeback Transform Offshoring to Homeshoring
Yeah, if you listen to the radio news, or watch television you’d think China had a corner on the manufacturing industry. And in the late 1990s and early 2000’s that may have been the case. Americans embraced globalization, its companies working like heck to produce products for everyone in the world. But to get their products to the world American companies took their industry overseas in favor of cheap labor, few regulations and infinitely less taxes.
As I walked through the Elk Grove plant, one of the owners laughed nervously as he picked up a circular object his workers had just painted, “I don’t know why they don’t do this in China.” Even manufacturing businesses in American can’t believe their fortune.
A recent report by Chat Reynders and Patrick McVeigh, Capital Management consultants, shows that China’s vice grip on manufacturing is loosening with the quickness. Here’s what the study found:
- Wage gap between China and U.S. is shrinking. The Chinese are paying more in labor which decreases the savings American firms can get there.
- The high price of oil has made shipping costs skyrocket.
- Companies are tired of having all their processes so spread out. They want all the product processes closer to home to save costs.
The report lists manufacturing powerhouses such as Ford, GM and Mercedes’ commitments to invest in U.S. jobs. (GM better invest in U.S. jobs, after all we taxpayers paid for those jobs.)
Another trend is in the industry real estate market. Companies leased about 306 million square feet, a level not seen since the 2008 recession began, according to Agora Financial’s blog. Those leases are a 14% increase from last year.
Homeshoring Good, Chinese Working Conditions Bad?
In addition, the recent New York Times expose of the conditions at Apple’s manufacturing plants in China has even given Apple’s most rabid fans pause. Apple trades at $453 a share. That makes it the most profitable company in the nation that isn’t in the fuel business. Surely all those profits could go to prevent the mass suicides, walk outs, injuries, and other atrocious workplace conditions Apple’s outsourcing firms allow to exist at its plants in China. Today, Apple weathered multi-city protests over the NYT’s story about working conditions at its third-party plant. Chang.org collected 250,000 signatures “calling for Apple to make its next iPhone model ‘ethical.'”
It’s only a matter of time before Apple will have to listen to its exceedingly supportive but highly progressive fan base on the labor issue. Read about Foxcomm, the largest employer in China who fuels all of our electronics from Wired.
I, like many people I suspect, had written American manufacturing off. I had been resigned that China had us beat. In fact, I was even happy about it. “Let China have those low-skilled jobs, and we’ll have our folks all become IT specialists.” But that hasn’t happened. With more Americans out of work and many incomes dipping below the poverty level we may profit from this rush to “homeshoring.” Also, with Chinese worker conditions rivaling anything written by Upton Sinclair on my hometown’s slaughter houses, it may be better to have manufacturing returned to our nation.
Here’s a slide show of some photos I took today. They’re pretty funky because of the burners used at the plant.