Curious Capitalist

How ‘Made in the USA’ is Making a Comeback

Manufacturing is back — but where are the jobs?

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Illustration by Chris LaBrooy for TIME
Illustration by Chris LaBrooy for TIME

The U.S. economy continues to struggle, and the weak March jobs report — just 88,000 positions were added — briefly spooked the market. But step back and you’ll see a bright spot, perhaps the best economic news the U.S. has witnessed since the rise of Silicon Valley: Made in the USA is making a comeback. Climbing out of the recession, the U.S. has seen its manufacturing growth outpace that of other advanced nations, with some 500,000 jobs created in the past three years. It marks the first time in more than a decade that the number of factory jobs has gone up instead of down. From ExOne’s 3-D manufacturing plant near Pittsburgh to Dow Chemical’s expanding ethylene and propylene production in Louisiana and Texas, which could create 35,000 jobs, American workers are busy making things that customers around the world want to buy — and defying the narrative of the nation’s supposedly inevitable manufacturing decline.

The past several months alone have seen some surprising reversals. Apple, famous for the city-size factories in China that produce its gadgets, decided to assemble one of its Mac computer lines in the U.S. Walmart, which pioneered global sourcing to find the lowest-priced goods for customers, said it would pump up spending with American suppliers by $50 billion over the next decade — and save money by doing so (for TIME’s new cover story, written by myself and Bill Saporito, and available to subscribers, click here). And Airbus will build JetBlue’s new jets in Alabama.

(MORE: The Cult of Apple in China)

Some economists argue that the gains are a natural part of the business cycle, rather than a sustainable recovery in the sector. But I would argue that the improvements of the last three years aren’t a blip. They are the sum of a powerful equation refiguring the global economy. U.S. factories increasingly have access to cheap energy thanks to oil and gas from the shale boom. For companies outside the U.S., it’s the opposite: high global oil prices translate into costlier fuel for ships and planes — which means some labor savings from low-cost plants in China evaporate when the goods are shipped thousands of miles. And about those low-cost plants: workers from China to India are demanding and getting bigger paychecks, while U.S. companies have won massive concessions from unions over the past decade. Suddenly the math on outsourcing doesn’t look quite as attractive. Paul Ashworth, the North America economist for research firm Capital Economics, is willing to go a step further. “The offshoring boom,” Ashworth wrote in a recent report, “does appear to have largely run its course.”

Today’s U.S. factories aren’t the noisy places where your grandfather knocked in four bolts a minute for eight hours a day. Dungarees and lunch pails are out; computer skills and specialized training are in, since the new made-in-America economics is centered largely on cutting-edge technologies. The trick for U.S. companies is to develop new manufacturing techniques ahead of global competitors and then use them to produce goods more efficiently on superautomated factory floors. These factories of the future have more machines and fewer workers — and those workers must be able to master the machines. Many new manufacturing jobs require at least a two-year tech degree to complement artisan skills such as welding or milling. The bar will only get higher: Some experts believe it won’t be too long before employers will expect a four-year degree — a job qualification that will eventually be required in many other places around the world too.

(MORE: Is U.S. Manufacturing Really Back?)

Understanding this new look is critical if the U.S. wants to nurture manufacturing and grow jobs. There are implications for educators (who must ensure that future workers have the right skills) as well as policy-makers (who may have to set new educational standards). “Manufacturing is coming back, but it’s evolving into a very different type of animal than the one most people recognize today,” says James Manyika, a director at McKinsey Global Institute who specializes in global high tech. “We’re going to see new jobs, but nowhere near the number some people expect, especially in the short term.”

Still, if the U.S. can get this right, though, the payoff will be tremendous. Manufacturing represents a whopping 67% of private-sector R&D spending as well as 30% of the country’s productivity growth. Every $1 of manufacturing activity returns $1.48 to the economy. “The ability to make things is fundamental to the ability to innovate things over the long term,” says Willy Shih, a Harvard Business School professor and co-author of Producing Prosperity: Why America Needs a Manufacturing Renaissance. “When you give up making products, you lose a lot of the added value.” In other words, what you make makes you. For more on the rebound in manufacturing and what it means for jobs and economic growth in the US, check out this week’s TIME magazine cover story, “Made In America.”
MORE: Economists: A Profession at Sea

20 comments
therifleman57
therifleman57

There is no revival of manufacturing jobs. In my area manufacturing jobs have disappeared almost entirely. In their place: Part- Time & temp jobs, retail, fast food, etc. These include no benefits and/or health insurance. And with Obamacare looming over the horizon it's not likely to get any better. yes, a lot of blame goes to management who keeps trying to wring every nickel of savings at the worker's expense. BUT government regulations, tax policies & inconsistencies in Fed policy all stifle expansion & investment.

SidAbma
SidAbma

The article said a big part of it is because of low priced natural gas. Now lets educate America!

Natural gas can be consumed much more efficient than it has been in the past. Natural gas can be consumed to near 100% Energy Efficiency.

Increased natural gas = Reduced utility bills = Profit            Increased natural gas energy Efficiency = Reduced Global Warming         Increased natural gas = Reduced CO2 emissions              Increased natural gas energy efficiency = Water conservation

If America can realize and grasp this, not only will profits be increased, but with the reduced  Hot exhaust NOT being blown into the atmosphere and the reduced carbon emissions our environment will also be improved for all Americans.                                                                                                                            

DanielMitchell
DanielMitchell

Sounds like manufacturing and business are going to have to invest in education for their workers, afterall the gubbermint doesn't have the money since these same businesses are not paying their share of taxes.

b4usa
b4usa

As the US manufacturing industry begins its return back to domestic production of goods and services, b4usa will be on the forefront of contributing to US made product awareness. The b4usa objective is to educate and motivate the American Consumer to purchase US made products and support American Companies.

JHuneke
JHuneke

We have a manufacturing fetish in this country. Do folks realize that 80 percent of our economy is services? And that we have a huge trade surplus in the services sector? Not that we should ignore manufacturing, but let's not pretend that everyone can be or wants to be a manufacturing worker. Useful insights from Robert J.Samuelson: Myths of post-industrial America http://wapo.st/16GrMlM via @washingtonpost

Garzhad
Garzhad

I always buy USA Made goods whenever possible. The only type of goods I trust anymore. Chinese materials/goods are just garbage. European-made stuff is generally pretty damn good, but i'd still rather have stuff 100% made here.

rightdemocrat
rightdemocrat

I attempt to buy American and preferably union-made whenever possible. One of the biggest purchases that middle class Americans will make is a buying a vehicle. It is very important to determine the actual U.S.  made content of a car not just the "North American" content that the car companies want to provide. 

We must develop an industrial policy to revitalize domestic manufacturing.  Our leaders must take action to bring trade into balance. The massive trade deficit is costing American jobs. 

BuyDirectUSA
BuyDirectUSA

We have been online since 1998. Our goal has been to promote Made in USA and create Jobs. The trend is very much coming back and the old saying, they dont make it here anymore is beginning to fade. Textiles and garments are making a huge comeback. Assembled in the US is a start but the consumers we speak to want to see 100$ Made in the USA. US Manufacturers are getting creative and using technology to help them regain the market-share from the likes of China and other nations. Americans need jobs, manufacturing even if a bit more high tech will help tremendously.

richard.stump
richard.stump

This is a great article. As an owner of an American made brand and re-shoring over 35+ tools from China two years ago it makes a lot of sense. If we could get the retailers to support more Made in the USA products and not have a conflict of interest with their made in China private label brands we would see a lot more US economic growth. I think the government should consider helping the manufacturing companies finance the tooling cost or subsidizing a portion of it. For brands this is a barrier of entry in manufacturing in the US versus China. The tooling cost is a lot more expensive here and manufacturers are reluctant to amortize these expenses as almost all Chinese factories do. The American consumers need to be willing to pay 5% more for products made here. The mass market does not care where the products are made and only base their buying decision on price. With that and little support from the retailers along with their higher margin requirements prevents many more companies from bringing the production back to the USA. My thoughts.....GO USA made!!

PaxtonK
PaxtonK

I am a big AV buff and had a hard time finding decent TV furniture made in the USA. Everything was junky stuff made in Asia. Then I found Standout Designs (http://www.standoutdesigns.com). Made in USA and made of real American wood. That means jobs for the lumber guys, jobs as the furniture factory, jobs at the packaging company, jobs at the finish company, and jobs at the glass company. Buying junk from China just contributes to clear-cut forests and air pollution.

Mark.Zetter
Mark.Zetter

How will progress made so far with North American re-shoring/US manufacturing be influenced as consumers in the two most populous nations, China and Indian, obtain greater amounts of discretionary income and exercise more traits of being a 'consumer'? Re-shoring interest have argued that freight/shipping costs, and labor, for US manufacturers with extended supply/manufacturing bases operating in these countries/offshore were calculating improper TCO, previously. Whereby, as consumers from China/India (greater Asia) gain more spend prominence, freight/shipping costs to get US goods to these new consumers will indeed be more important. 

I'm all for re-shoring and the important support of regional/local economies.

But decisions have to be made with sound reasoning.

It seems many are supporting re-shoring simply because they want jobs. These are valid reasons but is the reasoning correct? The real culprit of most manufacturing companies is cost of plant, property and equipment (P,P&E). If companies remove this from their books, ROIC increases dramatically. More on this here:

http://www.ventureoutsource.com/contract-manufacturing/benchmarks-best-practices/electronics-assembly/outsourcing-decisions-yes-or-no

Mark Zetter
President
VentureOutsource.com


USAlovelist
USAlovelist

It is exciting to read this story that confirms our sense of what is happening. "Made in America" is a surging movement I'm watching and experiencing daily. We've spent the last 18 months with our ears to the ground on the topic of American manufacturing. From businesses to retailers to consumers, the desire to make it in the USA and buy American is growing. I started USA Love List thinking it would be a challenge to find the few things Made in America anymore and learned that it is just not true. Quality, safety, concern for the environment, and care for our communities - these are all reasons for this fascinating and encouraging shift.  Thanks, Time Magazine, for covering this comeback!

Sarah Wagner
founder, USAlovelist.com

daena.vassar
daena.vassar

What are some of the interesting American brands?

I can think of Lodge iron skillets (Tennessee),  Field notes notebooks, local grocery even though they are still fairly more expensive than imported alternatives.)

ChrisieCanny
ChrisieCanny

As an owner of an American Made company, I so LOVE this! When we started FortuneKeeper in 2009, everyone told us to go overseas to manufacture and we said NO! We knew that staying in the US was the way. Our fathers was a clothing manufacturer who lost his business because he could not compete with the prices that China was offering. I think every store will be getting in on this, and then in the future, every country will be coming to the US to have something MADE!

LindaGeiser
LindaGeiser

I love the comments below. It's about time Americans banned together and see past the boloney that WalMart is selling. It's because of them (and large Big Box retailers of the sort) that we're in this mess. Cheaper is better at all costs has damaged us as a country.

buyamerican23
buyamerican23

I agree that Wal Mart should not be viewed as a 'comeback.' Companies like Wal Mart have never been for American Manufacturing and USA made items until it became a trend. There are companies out there who are 100% American Made and have been 100% American Made since their start! They are the ones who deserve credit for making American Manufacturing a comeback. I mean honestly, who really pushed citizens to buy American before it became a trend and Wal Mart decides to jump on the bandwagon? And, after years of being a part of the problem as a carrier of primarily foreign made goods... And I thought TIME was a real news source who conducted real research and was quite capable of finding the real companies and real people responsible for the American comeback.

NancyeKirtley
NancyeKirtley

Walmart...that's your Idea of American "comeback"?  I don't what planet your living on, but here in the United States, Walmart sells NOTHING BUT CHEAP, BADLY MADE CHINESE CRAP and PAYS TERRIBLE WAGES, so bad, in fact that a lot of their employees are on Food Stamps and Welfare. Nice try, but we all "aren't as dumb as a Tea Partyer>'''

KB100
KB100

@NancyeKirtley  I'm a fiscally conservative Republican, and hate Walmart as much as anyone. However, let's not leave intelligence behind by resorting to childish name-calling. I may say that people who think Government can continuously waste taxpayer money on projects that produce no real tangible benefit are 'dumb'. It puts people to work on borrowed money, racking up interest charges, ruining our fiscal house, all while producing no lasting benefit or future-growth prospects. There is a reason why people like the tea-party, because there is a entire industry built out of corruptly leeching money out of Federal coffers and the only way to make those corruptions squeak is to clamp down the budget - significantly! These people aren't any more dumb than teachers in teacher unions crying foul all the while driving imported cars made from non-union shops.