Another example of American companies bringing back production that had been outsourced to low-cost countries was in last week’s Fortune magazine. According to the article, “Made (again) in America,” the cost of shipping outsourced goods from China to the U.S. has doubled in two years due to high oil prices and rising labor costs in China. The article focuses on cookware producer Regal Ware, which has largely abandoned its 10-year effort to source goods to Chinese manufacturers. It turns out that executives at Regal Ware determined their manufacturing process was experiencing a costly bottleneck at its overseas locations, causing an inventory crunch back in the States.
From the article:
"We either had too much inventory, or not enough" of the products Regal Ware outsourced to China, says Jeffrey Reigle, CEO of the Kewaskum, Wisc.-based company. "We figured there had to be a better way."
The better way, it turns out, proved to be right under his nose, at two Wisconsin plants where Regal Ware has produced stainless steel pots and pans for more than 50 years.
No, manufacturers aren’t exactly stampeding to bring production back to domestic plants, but anecdotal evidence, at least, shows that outsourcing to a low-cost country is not as low-cost as once thought. For those companies who have already invested money in the infrastructure to support outsourcing manufacturing, coming back isn’t an easy decision, either. At what point do companies feel it’s time to return manufacturing to the U.S.? And for all the press that the return of manufacturing is receiving, is it truly becoming a trend?