Monday, January 30, 2012

Bringing Manufacturing Jobs Back to the U.S.


Tonight's "Rock Center" show on NBC at 10 p.m. ET will have a segment on the rebound in American manufacturing, featuring Lincolnton Furniture, a  six-generation American furniture company, which has recently started making furniture in North Carolina again after previously shutting down its U.S. factories back in 1996 to move production to China for lower wage costs.  Watch a preview above from CNBC this morning.

14 Comments:

At 1/30/2012 3:35 PM, Blogger Benjamin said...

Having been furniture trade for 20 years, this is interesting to me. I can tell you the temp floor of World Market Center in Las Vegas (furniture wholesale show) was flooded with Chinese imports a few years back. Now I am hearing such imports cost more and more, and require larger minimum orders.

I figure in 10 years much business will relocate back to USA, especially for smaller orders.

For some manufacturers, who are able to sell directly to public through Internet (thus avoiding the usual 100 percent retail mark-up) there may be a bright future.

If UPS or Fedex can develop a system to deliver slightly larger packages--such as coffee tables with knock-down legs--economically, the market could be huge. Basically, UPS wants $150 for a larger package, and they need to get it down to $100.

The last great very cheap manufacturing platform on Earth is fading away. China.

 
At 1/30/2012 4:37 PM, Blogger Buddy R Pacifico said...

"If UPS or Fedex can develop a system to deliver slightly larger packages--such as coffee tables with knock-down legs--economically, the market could be huge. Basically, UPS wants $150 for a larger package, and they need to get it down to $100."

U.S. furniture manufacturers can hopefully design and build a coffee table, including packaging, under forty pounds. They will then be able to ship anywhere in the U.S. using UPS Ground for less than $100.

My U.S. made furniture outwears Asian imports I have bought.

 
At 1/30/2012 4:44 PM, Blogger Jon Murphy said...

The last great very cheap manufacturing platform on Earth is fading away. China.

But being replaced by Vietnam and Thailand.

Frankly, I'm surprised all this is coming as a surprise to anybody. This is the highly predictable result of trade models.

 
At 1/30/2012 6:12 PM, Blogger Benjamin said...

Buddy-

Try making a coffee table that weighs under 40 pounds. Perhaps all pine--but there are size limits also.

Jon-

Thailand is already benefitting from offshoring, from Japan. But Vietnam, Thailand are dinky countries next to China, and infrastructure is not as good, and people are not Chinese. Sure, you can make goods n Mexico, Thailand, Brazil etc etc etc---just never as cheaply as China, a once a lifetime event. Plus I hear the Communist Party is getting more difficult to work with, demanding better terms from Westerners.

I see USA manufacturing revival, if the Fed tries to keep our currency competitive.

 
At 1/30/2012 6:24 PM, Blogger sethstorm said...


But being replaced by Vietnam and Thailand.

Two more despotic nations where the government can be used to control the workforce to business' whims.

When work returns to the US, it had better be something that US citizens themselves can afford as well as the larger things they cannot.

 
At 1/30/2012 8:50 PM, Blogger Jon Murphy said...

Thailand is already benefitting from offshoring, from Japan. But Vietnam, Thailand are dinky countries next to China, and infrastructure is not as good, and people are not Chinese.

You are correct, but the same things were said when manufacturing was moving out of Japan and into China. One of the miracles of trade is how it modernizes the country. Foreign firms invest in the infrastructure of the nation. Just look how far China has come since it's liberalization of trade. Granted, it still has a long way to go, but the changes are amazing.

I see USA manufacturing revival, if the Fed tries to keep our currency competitive.

I agree with you, but this has been going on long before the Fed decided to artificially weaken the dollar. Transaction costs have been rising and more companies have been moving their manufacturing closer to their customer base. It has many benefits (but that's neither here nor there).

 
At 1/30/2012 10:14 PM, Blogger Hydra said...

Benji:

I bet with cold molded veneers you could make a sturdy coffee table well under ten pounds.

 
At 1/30/2012 11:25 PM, Blogger Benjamin said...

Jon Murphy-

Perhaps the dollar was "artificially" strong before. Maybe it is too "strong" now--although what has been called a "strong" dollar has been weak for American business.

Frankly, I wish the dollar would go much "lower,' so that American businesses become even more competitive.

Hydra-

Cold molded veneers are an interesting idea. The trick is to make a coffee table that you can sell wholesale at under $200, or direct Internet-retail at $300 or so.

Not sure the buying public wants this particular look either.

But it is a fun idea. I might make one.

You also have to make it strong enough that UPS won't destroy it. That takes some doing and packing.

 
At 1/31/2012 7:00 AM, Blogger sykes.1 said...

The manufacturing plants may come back, but the jobs won't. The ongoing process of automation will gradually reduce the number of workers.

 
At 1/31/2012 8:58 AM, Blogger Jon Murphy said...

Frankly, I wish the dollar would go much "lower,' so that American businesses become even more competitive.

Of course, the opposite side of that coin is higher prices Americans pay for imports. Don't forget that the vast majority of our imports are intermediate goods used by these very same factories. We could also see higher gasoline prices (on the oil/refined products we import).

Personally, I think we should start practicing what we preach: we clamor at China for currency manipulation as we run the print ourselves. We should just allow the free-floating exchange rate regime to do its thing.

 
At 1/31/2012 10:40 AM, Blogger Jet Beagle said...

Benjamin,

I think UPS uses "dim weight" pricing for large packages. As I understand it, if (1 X length plus 2 X width plus 2 X height) exceeds 130 inches, the customer gets charged for a 90 pound package. A coffee table in a 40X30X6 box would be OK. One a little larger than that might not be.

 
At 1/31/2012 10:47 AM, Blogger Jet Beagle said...

sykes.1: "The ongoing process of automation will gradually reduce the number of workers."

The jobs specifically categorized as "manufacturing" may get automated. But many jobs related to the automated factories - such as equipment maintenance, security, engineering, transportation, and many more - will still exist. Furthermore, if onshoring and automating are reducing total costs, then American consumers will be able to afford more goods than they do today. Which means that more services will be demanded.

As manufacturing jobs have been automated over the past 250 years, two things have been constant:

1. standards of living have continued to increase;

2. numbers of employed workers have continued to increase.

There is nothing special about the 21st century that will alter those trends.

 
At 2/01/2012 11:31 AM, Blogger David said...

Automation...too many people are talking about this as if it were a new thing. But I don't see anything in today's automation processes that is likely to exceed the impact of mechanized spinning and weaving in the early 1800s, or interchangeable parts and the assembly line from 1850 through 1920, or numerically controlled machine tools circa 1970.

 
At 5/04/2012 1:30 AM, Blogger karvsmith said...

well this is great for manufacturing platform and best method for If you enjoy working with others and providing people with the products and services that they are in need of, then a position in delivery or packaging may be the best for you UPS jobs

 

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