Manufacturing is returning to the US
Manufacturers are starting to understand the reasons to bring manufacturing back from overseas. US consumers care about where their products are made. Wages are on the rise overseas, but remain stable in the US. Better products result from tighter turnaround time between design and engineering teams.
Motorola recently announced that their new flagship smartphone, designed to compete with the iPhone 5S and Galaxy lines, will have final assembly done in a Texas factory.
Other companies are following suit.
Motorola’s Announcement for the MotoX
Motorola’s Moto-X smartphone has recently come out to critical acclaim. It is a high end smartphone comparable to Apple’s new iPhone 5S. (See CNET’s comparison of the MotoX versus iPhone 5S.)
The Verge recently published an article on the manufacture of the new phone, designed to complete with the Galaxy and iPhone lines. (See “Made in America: A look inside Motorola’s Moto X factory“.) In it, they talk about how Motorola rebuilt an old Nokia factory in order to perform final assembly of their top-of-the-line smartphone in Texas.
From The Verge:
[The MotoX is] going to be built in Texas, in a 480,000-square-foot facility previously used to manufacture Nokia phones. Woodside says Moto X will be the first smartphone built in the United States, and was clearly proud of that fact
Some of the reasons cited for US manufacture:
- Quicker turnaround time (faster fulfillment)
- Direct fulfillment for customized, made-to-order relationships (better customization)
- The proximity of the design and manufacturing engineers enables the design team to make tweaks to the phone and quickly push them into production (tighter loop between design and manufacturing teams)
Further, the Motorola CEO explicitly mentioned the following business reasons for moving manufacturing:
There is a premium [with building in the US] but it’s not material to the economics of the business. It’s a myth that you can’t bring manufacturing here because it’s too expensive… We’ve observed that wages in Asia are going up, wages here are relatively steady, consumers care more about where their products are being built, and you have advantages of having design close to your manufacture. Those advantages will well outweigh the costs that we have today and those costs will go down over time.
The rush to manufacture overseas was primarily driven by the bottom line, which was a product of a lower standard of living in poorer countries. Lower labor costs and fewer regulations meant companies saved huge sums of money by moving all manufacturing to China, Korea, and other centers of manufacture.
Now, however, some manufacturing is coming back. Cheap toys will continue to be made abroad, but innovative, high quality manufacturing is returning. And it will bring high quality manufacturing jobs back with it.