Consumers an Important Force in Reshoring Movement

Matt Shelly
Posted by


For the last decade and a half, the American production industry has been slowly moving its operations offshore. China, Thailand, India, and parts of Africa have all seen a gradual influx of US companies looking to reduce overhead costs. Now, however, America has loosened her grip on overseas sources in favor of reshoring. The manufacturing crusaders are steadily coming home—and their customers have a lot to do with it.

At the August 2013 Walmart summit in Orlando, the quintessential big-box retailer pledged to source $50 billion of American-made products in the next ten years. The ultimate low-price retailer, it seems, has decided to bring business back to the US.

Walmart isn't the only corporation with its eye on "Made in America" labels. Other big-name brand like Apple, Michelin, and General Electric also plan to invest in US-made goods. All of these companies have a common factor: their survival depends on consumers, without whom they would have no business at all.

In 2008, Walmart stopped selling milk produced by hormone-treated cows as consumers simply didn't want to buy the milk. Similarly, the recent trend toward American-made items has created a problem for large retailers like Walmart and its peers. If sales of foreign-made good are on the decline, corporations simply need to modify their supply chains to match demand.

Another significant force behind the reshoring movement is robotics. Many modern companies have replaced the need for human production-line workers by making robots part of the manufacturing process. Despite this trend, manufacturing positions are still available—they're just different.

Ironically, robots will be responsible for creating a whole slew of brand new jobs on US soil because their cost-saving efficacy has, in part, enabled reshoring in the first place. Robots need to be taken care of on a daily basis, repaired, programmed, and upgraded. All those tasks require human input: the difference is that this time, the on-shore manufacturing industry requires a skilled—rather than an unskilled—workforce.

Other factors behind reshoring include the increasing number of states in which right-to-work laws, which prevent union security agreements and union-employer agreements, exist. Unions are still allowed to exist in these states, but they cannot compel workers to become union members or to pay union dues—either before or after they are hired. There are currently twenty-four right-to-work states, including Arizona, Indiana, North Dakota, and, most recently, Michigan.

Unions hold significantly less power over production workers in right-to-work states. This weakened union grip makes negotiation and mediation—rather than union action—more likely at critical times. Many manufacturers prefer to communicate directly with employees rather than via union reps, and for that reason, right-to-work states are attractive places to set up shop.

It seems reshoring has become a trend in the manufacturing industry because of buyers' changing needs, which are driven by consumer demand. If customers consistently choose American-made items over products with "Made in China" labels on them, then retailers' supply chains have to change to satisfy their clientele. So, while there are several reasons for the reshoring movement, perhaps the most important one is public opinion.

(Photo courtesy of dan / Freedigitalphotos.net)

Comment

Become a member to take advantage of more features, like commenting and voting.

Jobs to Watch