"I do that because I think we can do it here and make more money." Manufacturing Returns to America

#Companies

Fri, Dec 7th, 2012 11:00 by capnasty NEWS

Charles Fishman of The Atlantic has this fascinating article on what he calls The Insourcing Boom: manufacturing off-shore, particularly in China, with the rising costs of labour, petrol and gas, is now a thing of the past and companies are resurrecting production lines at home. The problem? Nobody remembers how to build anything anymore.

On March 20, just 39 days later, Appliance Park opened a second new assembly line, this one in Building 5, to make new high-tech French-door refrigerators. The top-end model can sense the size of the container you place beneath its purified-water spigot, and shuts the spigot off automatically when the container is full. These refrigerators are the latest versions of a style that for years has been made in Mexico.

Another assembly line is under construction in Building 3, to make a new stainless-steel dishwasher starting in early 2013. Building 1 is getting an assembly line to make the trendy front-loading washers and matching dryers Americans are enamored of; GE has never before made those in the United States. And Appliance Park already has new plastics-manufacturing facilities to make parts for these appliances, including simple items like the plastic-coated wire racks that go in the dishwashers.

In the midst of this revival, Immelt made a startling assertion. Writing in Harvard Business Review in March, he declared that outsourcing is "quickly becoming mostly outdated as a business model for GE Appliances." Just four years after he tried to sell Appliance Park, believing it to be a relic of an era GE had transcended, he's spending some $800 million to bring the place back to life. "I don't do that because I run a charity," he said at a public event in September. "I do that because I think we can do it here and make more money."

Immelt hasn't just changed course; he's pirouetted.

What has happened? Just five years ago, not to mention 10 or 20 years ago, the unchallenged logic of the global economy was that you couldn't manufacture much besides a fast-food hamburger in the United States. Now the CEO of America's leading industrial manufacturing company says it's not Appliance Park that's obsolete -- it's offshoring that is.

Why does it suddenly make irresistible business sense to build not just dishwashers in Appliance Park, but dishwasher racks as well?

And it's not just General Electric that's looking to build at home. Apple has reportedly decided to start doing it as well.

Apple CEO Tim Cook revealed that one of the existing Mac lines will be manufactured exclusively in the United States next year, making the comments during an exclusive interview with Brian Williams airing tonight at 10pm/9c on NBC's "Rock Center." Mac fans will have to wait to see which Mac line it will be because Apple, widely known for its secrecy, left it vague.

"We've been working for years on doing more and more in the United States," Cook told Williams.

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