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Uptick in U.S. Manufacturing to Continue in 2013
Posted by Rebecca Ray on December 21, 2012  in the following blogs: Supplier Business Issues, Market Data
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Apple recently announced that it will resume manufacturing in the U.S. in 2013. It joins other U.S.-based companies, such as GE, Otis Elevator, and Whirlpool, which over the last year have announced similar decisions. Executives and logistics teams appear to be coming up a bit short as they re-run their calculations to reflect rising labor rates, higher transportation costs, and the 360 degree cost of global outsourcing. Add these companies to European- and Asian-based firms such as Honda, Lenovo, and Volkswagen that are ramping up their manufacturing facilities in the U.S., and it is clear that insourcing may become a real trend over the next few years.

Several forces are coming together to push businesses to reconsider the value of maintaining production closer to their prospects and customers, whether they live in Beijing, Berlin, or Boston. The requirement for faster delivery times to many more local markets is making it harder for companies to justify the lag time in shipping or higher transportation fees. Lower costs for labor, natural gas, and electricity, along with higher worker productivity, are now enabling the U.S. to compete on a more even playing field against the total cost of extended supply chains. The lower labor cost and higher productivity rates are especially attractive to European firms as they leverage the two-tier wage system and much shorter vacation periods in the U.S.

These same factors could help the U.S. increase its exports. Some of the most promising sectors for these increased manufacturing opportunities include chemicals, appliances and electrical equipment (for example, fans, vacuums, refrigerators, and washers), machinery (air conditioners, heaters, pumping equipment, power tools, and farm equipment), and transportation equipment.

According to one of our recent reports, the manufacturing vertical corresponds to US$11.13 billion, or almost one-third of the total market for outsourced language services of US$33.52 billion. It represents an enormous opportunity for all suppliers in the language services industry, be they freelancers, small agencies, single-language vendors, medium-sized firms, or large multi-language vendors. With hundreds of sub-sectors to serve, language suppliers with an established offering, as well as those new to manufacturing, can carve out additional sources of revenue. The language services industry is fortunate in that its members can play both sides of the fence: Supporting veteran exporters that must replace slowing domestic revenue with sales from new markets, at the same time that they enable companies in growing economies to move beyond their borders for the first time.

 

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