After Years of Offshore Production, U.S. Generates Insourcing Boom

General Electric’s Appliance Park, a place where manufacturing jobs once boomed in America in the from the 1950’s to the 70’s, saw most of its business shipped overseas in the 2000’s. It wasn’t just there. Throughout the country, factory jobs were lost seven times faster between 2000 and 2010 than between 1980 and 2000.

“Yet this year, something curious and hopeful has begun to happen, something that cannot be explained merely by the ebbing of the Great Recession, and with it the cyclical return of recently laid-off workers. On February 10, Appliance Park opened an all-new assembly line in Building 2 — largely dormant for 14 years — to make cutting-edge, low-energy water heaters,” writes The Atlantic. Then it opened another assembly line. And a third one is set to open soon.

Rising oil prices make shipping overseas far more expensive now than it was in 2000. In addition, rising labor costs in China and rising productivity in the U.S. have combined to make it more attractive to manufacture in the U.S.

“What’s happening in factories across the U.S. is not simply a reversal of decades of outsourcing,” notes The Atlantic. “If there was once a rush to push factories of nearly every kind offshore, their return is more careful; many things are never coming back.”

One example is Levi Strauss, a company that used to have more than 60 domestic plants and now contracts with 16 and owns none. “…it’s hard to imagine mass-market clothing factories ever coming back in significant numbers — the work is too basic,” according to the article.

But other companies are returning and with good reason: “Insourcing solves a whole bundle of problems — it simplifies transportation; it gives people confidence in the competitive security of their ideas; it lets companies manage costs with real transparency and close to home; it means a company can be as nimble as it wants to be, because the Pacific Ocean isn’t standing in the way of getting the right product to the right customer.”