Factories Rethinking Outsourcing Strategies To Bring Manufacturing Back Home

May 29, 2010

With so many jobs being outsourced overseas, there is a rethinking in the U.S. that more jobs should go to American factories. In the last six years, about 6 million jobs have been shipped abroad with most of it going to China and India, as the cost of labor is cheap there.

One of these plants that is having a change of heart is Peerless Industries, where die-casting is used to make TV wall mounts. Converting molten metal into parts like this is not common in the U.S. A plant in Northern Illinois capitalizes in making these TV mounts. This type of work used to be outsourced to China, but the company has brought it back and created 100 more jobs for new workers. One of them is 53-year old Joe Dolack, who thought he was finished with the die casting business a couple of years ago. But now he’s back and working.

Dolack, who is a supervisor at Peerless Industries, told pbs.org, “When we shut down the last plant I didn’t think there was a chance of finding another job, at least in the Chicago land area.”

The company now says that what it saved in labor in sending jobs to China, it had to shell out it in inventory. Some of the other concerns facing the firm when doing business in China are intellectual property rights and quality. Over the last couple of years, there were a spate of products that did not meet health standards from bacteria-laden food to lead paint in toys.

In addition, most customers come to Peerless to get their products made fast and this is always a problem when parts arrive late from China. This meant that the firm had to go with more products in its inventories and this would get expensive.

Going to China steered us into a direction of us not being a manufacturer as much as we were. And we wanted to control, you know, our destiny and our quality and our products and our designs. So we made the strategic decision to bring it back to the U.S.,” said Michael Campagna, President of Peerless.

Subsequently, Peerless has moved all of its production to the U.S. The firm was able to get its parts on the cheap. Additionally, with layoffs prevalent in the automobile industry, it was also easy to find employees.

A market analyst with Morning Star said idling manufacturing activity in the U.S. along with increasing labor costs in the mainland and transportation expenses are making American factories rethink their options. Moreover, Chinese currency, the yuan, is also a cause of alarm as some say it is deflated.

Larsen was quoted as saying, “With the peg to the dollar, companies really don’t have to worry too much about currency fluctuations. That’s not necessarily a risk. But looking forward, if we do lose that peg that is something companies are definitely going to have to pay attention to. It is a potential risk factor.”


Comments

6 Responses to “Factories Rethinking Outsourcing Strategies To Bring Manufacturing Back Home”

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  2. manufacturing outsourcing on June 1st, 2010 10:32 pm

    With the current economy, many companies in US are rethinking their strategy to bring back the manufacturing back to US. Of course, it is very minimal, but it is good for US workers who couldn’t find jobs in US.

  3. Manjeet Kaur on June 4th, 2010 1:14 am

    Hi

    I am working on a project where I need to find some more examples of such companies. It would be really nice if any of you could help me with this.

    Thanks

  4. outsourcing is coming back on June 6th, 2010 1:51 am

    Interesting, what goes out must come back. As the developing countries economy grows so does the cost. Soon US companies will realize the manufacturing in US is more economical than sending it to China

  5. Reverse Outsourcing on June 22nd, 2010 10:47 am

    Good to know that jobs are coming back to US

  6. Billy Jackson on March 4th, 2011 6:42 pm

    All i know is,Ive stopped buying anything made overseas,aspecaily american company products shipped back in to be sold.And,Lots of people,are.They realize that.evan though you save some money at the cashregister,you pay more for it in other ways,like higher taxes to cover the lost tax base,and unemployment,Not everyone likes flipping burgers for a living.The trade deficits,with other countries,and home values,as people can no longer buy them,I make a lot of the stuff i need like furniture,and clothing,After all being unemployed and on unemployment with no real prospect of finding meaningfull wok,well you have more time on your hands.and less money,sometimes i go to the dump,and find fixable items,and fix and paint ect.and sell on the side.or buy used.Id rather be working and helping this country get back on its feet,but we know that outsourcing has caused a lot of this tanked econamy,people have been boycotting walmart alltogether.And the illegal aliens stealing what fue jobs are left well,we are pooting a stop to that to.its corperate greed,so we have been contacting representatives eurging terrifs in imports, aspecally those contries our manufacturing,IT and customer service jobs have left to.That said when they come back,they will have a well rested work force,And really it’s a matter of they are hurting theyer country.

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