WASHINGTON (Reuters) - Big manufacturers moved their production out of the country too quickly over the past decades and now see a competitive advantage in building up their footprints back home, top executives said on Monday. http://news.yahoo.com/lemming-exodus-ma ... 14959.htmlI think this article missed on a few major concerns with oversees production:
The chase for lower-paid workers drove the migration, which resulted in employment in the U.S. manufacturing sector falling by 40 percent from its 1980 peak. But big companies including Boeing Co and General Electric Co are now finding that the benefit of lower wages can be offset by higher logistics and materials costs.
"We, lemming-like, over the last 15 years extended our supply chains a little too far globally in the name of low cost," said Jim McNerney, chief executive of world No. 2 planemaker Boeing. "We lost control in some cases over quality and service when we did that, we underestimated in some cases the value of our workers back here."
Boeing in particular ran into extensive delays in the launch of its 787 Dreamliner aircraft, handing off much of the manufacturing responsibility to outside suppliers, leaving the launch of the fuel-efficient aircraft some three years behind schedule.
"You are going to see more (manufacturing) come back to the United States, and that's in part for business reasons and in part because we want to be good citizens," McNerney said.
1. ITAR. This is getting more and more enforcement and is a huge headache for companies that are actually complaint.
2. Quality control. Including poor training, bad execution of techniques, unauthorized subsituions materials, and cover-ups of QA-related issues. It glosses over it, but it's a huge problem when you're building a widget that can't be sold because it isn't to standards. Furthermore, if you do get widgets on the market, and the quality is so poor, people start to percieve the quality as bad, you lose base.
3. Logisitcs. Who wants to spend a week in Juárez MX to oversee the setup of the new widget line? Anyone? By a show of hands... That's what I thought...
4. Criminal activity. See #3, but also in some countries the only way to work "through" the system is to bribe your way through. Aside from any PR issues this might raise, I think companies are becoming less comfortable with breaking laws, even if it is common practice and oversees.