5-13-2014
http://www.latimes.com/business/la-fi-returning-jobs-20140513-story.html#page=1
After decades of exodus, companies returning production to the U.S.
In 2001, Generac Power Systems joined the wave of American companies shifting production to China.
The move wiped out 400 jobs in southeast Wisconsin, but few could argue with management's logic: Chinese companies were offering to make a key component for $100 per unit less than the cost of producing it in the U.S.
Now, however, Generac has brought manufacturing of that component back to its Whitewater plant creating about 80 jobs in this town of about ‎14,500 people.
The move is part of a sea change in American manufacturing: After three decades of an exodus of production to China and other low-wage countries, companies have sharply curtailed moves abroad.
Generac grew rapidly over most of the rest of the decade. Its sales rose to $1.5 billion last year, and it now has about 3,300 workers, including 720 in Whitewater, its largest plant. But the last decade also saw costs surge in China while they increased little in the U.S.
What began as a $100 gap in the cost of producing an alternator narrowed as the Chinese yuan jumped in value and Chinese wages and other costs soared.
The tipping point came when Generac had enough sales to justify investing millions of dollars in new equipment for the Whitewater plant. The company can now produce an alternator with one worker in the time it took four workers in China.
Some, like Generac, have begun to return manufacturing to U.S. shores.
Harry Moser, an MIT-trained engineer who tracks the inflow of jobs, estimates that last year marked the first time since the offshoring trend began that factory jobs returning to the U.S. matched the number lost, at about 40,000 each.
"Offshoring and 're-shoring' were roughly in balance I call that victory," said Moser
Several factors lie behind the change.
Over the last decade, Chinese labor and transportation costs have jumped while U.S. wages have stagnated.
The average hourly pay for non-supervisory manufacturing workers in the U.S. has barely kept up with inflation
Factoring in the rise in value of its currency, China's base wage, measured in dollars, has risen 17% a year
The boom in natural gas production in the U.S., largely driven by fracking and other new drilling techniques, has led to a 25% decrease in gas prices in the U.S., contrasted with a 138% increase in China
http://www.latimes.com/business/la-fi-returning-jobs-20140513-story.html#page=1
After decades of exodus, companies returning production to the U.S.
In 2001, Generac Power Systems joined the wave of American companies shifting production to China.
The move wiped out 400 jobs in southeast Wisconsin, but few could argue with management's logic: Chinese companies were offering to make a key component for $100 per unit less than the cost of producing it in the U.S.
Now, however, Generac has brought manufacturing of that component back to its Whitewater plant creating about 80 jobs in this town of about ‎14,500 people.
The move is part of a sea change in American manufacturing: After three decades of an exodus of production to China and other low-wage countries, companies have sharply curtailed moves abroad.
Generac grew rapidly over most of the rest of the decade. Its sales rose to $1.5 billion last year, and it now has about 3,300 workers, including 720 in Whitewater, its largest plant. But the last decade also saw costs surge in China while they increased little in the U.S.
What began as a $100 gap in the cost of producing an alternator narrowed as the Chinese yuan jumped in value and Chinese wages and other costs soared.
The tipping point came when Generac had enough sales to justify investing millions of dollars in new equipment for the Whitewater plant. The company can now produce an alternator with one worker in the time it took four workers in China.
Some, like Generac, have begun to return manufacturing to U.S. shores.
Harry Moser, an MIT-trained engineer who tracks the inflow of jobs, estimates that last year marked the first time since the offshoring trend began that factory jobs returning to the U.S. matched the number lost, at about 40,000 each.
"Offshoring and 're-shoring' were roughly in balance I call that victory," said Moser
Several factors lie behind the change.
Over the last decade, Chinese labor and transportation costs have jumped while U.S. wages have stagnated.
The average hourly pay for non-supervisory manufacturing workers in the U.S. has barely kept up with inflation
Factoring in the rise in value of its currency, China's base wage, measured in dollars, has risen 17% a year
The boom in natural gas production in the U.S., largely driven by fracking and other new drilling techniques, has led to a 25% decrease in gas prices in the U.S., contrasted with a 138% increase in China
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