The release of the “Made In America, Again” and “Manufacturing Nears the Tipping Point” studies by the Boston Consulting group has given a lot of ammunition to those who have a stake in products ‘Made In USA’.   I am very happy to see the tables tipping a little bit more in our direction.   The electronic industry job boards are bursting with new postings and the economy seems to be helping.

The exodus of electronics manufacturing accelerated dramatically in 2000. It was a perfect storm of very high demand from Windows XP and the entire electronics industry from top to bottom was searching for capacity.  China entered the WCT and filled the vacuum.   Industry executives right and left were grabbing quick cost reductions by sending business offshore, mainly to China.   Cheaper labor was only one component of the cost reduction.  Cheaper alternative components combined with inequalities in regional cost structures made up the rest.

The large companies started the exodus and it appears the same thing is happening on the way back. GE, Apple and Google have all made announcements within the last year or so of new programs that will be built here in the US.   A recent survey by IPC last year concluded that new programs will represent most of the increase.  It’s not so much products coming back to shore, but as cost differences level out, more companies are going to follow strategies of designing and producing products where they are used.

One cloud on the horizon is the structural cost differences between the US and major trading partners in Europe and those in Asia.    I need to read the BCG studies again after looking at this because I’m having a hard time reconciling the two.   I am not seeing that kind of cost difference in quotes.  It depends on the cost model you are using and the truth probably lies somewhere in between.

I was with a medium sized EMS company that was extremely successful in growing at the same time the electronics industry was making a fast exit to Asia.  We did it by getting smaller before we grew and improving the business.  We drove lean through every nook and cranny.  We focused on the right customers.  Ones who valued short low-inventory/high response supply chains.   By delivering what we promised the customers rewarded us for it.   It’s a formula that will still work today.   The only question is will it lead to outstanding success or is it necessary simply to survive.

 

 

Leave a Reply