Reshoring

See on Scoop.it – lean manufacturing

“In years past, if you bought an iPhone case from Fort Collins-based OtterBox, the nation’s leading cellphone casemaker, it was a given that the product, like the gadget it protects, wasn’t made in the U.S.A.

That’s starting to change.

‘We’ve been able to reshore about 15 to 20 percent of our volume back to the U.S. from China over the last year,” said Bill Lovell, OtterBox’s global director of supply chain…'”

This is an “I told you so” moment. For years, we were telling US manufacturers that it made business sense to improve their existing operations, only to hear executives say “We’ll skip Lean and go straight to China.”

In emerging economies, low wages are temporary, and they come with low productivity and quality, long lead times across oceans, and high logistics costs. As the work force learns manufacturing, wages rise along with performance, and the cost advantages vanish.

Admitting there are cases where chasing low wages around the world makes economic sense, in most, if you invest in an emerging economy, you do better by betting on its future, and developing relationships that pay off more and more as it grows, for example by building local factories to serve the local market, as the top car companies have done in China.
See on www.denverpost.com