Since the year 2000 until just recently, American manufacturing has been on a downward trend. With the rise of China as a manufacturing power, many American companies began moving offshore. This means companies closed down their operations in America and moved to China.
Why Did Companies Leave America?
Between 2000 and 2009, 6 million factory workers lost their jobs due to these companies moving offshore. The culprit was China. During such period, China was at its peak of economic development. The reason was cheap labor, cheap raw materials, and rapidly growing market, as well as tax incentives.
By 2010, almost all multinational companies in the world already had their own plants in China. Car manufacturers, mobile phone brands, and food processors in America moved to China in the hope of cutting their operational costs.
The Impact of Offshoring
The impact of offshoring has been very significant. China became the second-largest economy in the world in an instant. All of a sudden, China became one of the leading economic indicators in the global trading world.
It's true that many companies have benefited from offshoring. This is why most companies in the world established their plants in China. However, this trend has been short-lived. Since too many companies jumped over to China at the same time, the Chinese economy overheated, and the result seems to have a negative impact.
The Global Crisis
The thing that once made China a superpower is also what injured it. Offshoring began to take place. Global crisis was the culprit and because of this, manufacturing costs in China soared. Labor is beginning to rise, and inflation in China is increasing.
Furthermore, the cost of shipping from China to different parts around the world has become very high. The most painful reality is that the Chinese market has already been saturated. Therefore, companies are forced to market their products where there is huge demand for them, and that is back home.
The Return of American Manufacturing Companies
One of the reasons behind the fall of Chinese market is overproduction. Not all products that are produced in China can be absorbed by its market. These products can be sold in nearby countries to offset the rise in shipping costs. However, quality issues took their toll. In India, South Korea, Japan, and in South-East Asia regions, the "Made in China" label has become an object of fear. It's a reality in such countries to seek a brand again that is either made in Germany or made in the USA because these countries offered high-quality manufactured goods.
As a result, people around the world began to choose products that are made in the USA. Some companies that stayed and survived in the US began to see a new horizon of manufacturing. They start accepting orders beyond their usual production capacity. This led them to consider expansion in the US with a bright future.
The Growth of American Manufacturing Companies
Manufacturing companies in US are not only coming back they are also growing. The industrial production in the country as of July 2016 grew by 0.7 percent, which is the highest since November 2014. US manufacturing PMI from just above 30 in 2009 to above 50 in 2016. Above 50 means rapid expansion.
This number represents products that are purely made in the USA. This means that the growth of the American manufacturing sector is a genuine growth. The production output does not include foreign OEMs and imported raw materials. The Federal Trade Commission (FTC) monitors the market strictly. They check all components of every product that is assembled in the USA to determine whether a product is purely made in the USA or just assembled through imported raw materials.
The Case of Hessaire
Hessaire is a cooling machine and fan blade manufacturer. It's one of the many companies in America that is bringing back jobs that were lost in the past due to outsourcing. In 2013, Hessaire took over a once large company that closed in 2010, which sold jeans. It is also even active in reoffshoring, a move to bring back the old glory of "made in the USA" concept. Hessaire is just one of many companies bringing back America's manufacturing glory.
The growth of American manufacturing industry is not temporary nor accidental. It has strong fundamentals that are sustainable and long lasting. Consumers around the world are already sick and tired of the poor-quality of most products that are made in China. The demand for quality products is very strong. Today, there is a continuous demand for whatever that is made in the USA and will be going forward.