It seemed simple – reduce costs by moving operations from highly paid US workers to low wage off-shore producers.   Rather than swallow the bitter medicine needed to cure internal inefficiencies, just off-shore the entire process.

But off-shoring spawned its own progeny of problems …

… Some are obvious -

- rising transportation expense combines with tariffs, inspection, insurance and warehousing to greatly increase actual landed cost.

- long lead times, labor inefficiencies and variable quality render supply chains fragile and unreliable.

- costly facilitation, freight expediting and domestic re-work are common, but are the only recourse when the supply chain fails.

… Others are hidden -

- loss of manufacturing flexibility to accommodate changing customer specs

- diversion of engineering talent from reducing engineered-in costs to the troubleshooting of distant manufacturing processes.

- loss of proprietary assets through the disregard of intellectual property rights.

- public relations backlash against firms seen as exploiting overseas workers with ‘sweatshop’ working conditions.

- environmental and societal repercussions of loose off-shore anti-pollution regulations.

- no creation of strategic advantage – at best off-shoring is competitively neutral, at worst it leaves a firm strategically vulnerable.

In short, although off-shoring can produce temporary labor cost savings, these savings can quickly erode.  Off-shoring can not only increase a firm’s non-labor costs, but also entrench those costs against effective reduction.  And off-shoring does nothing to forge sustainable competitive advantage.

Made In America is a recognition of the ongoing cost advantage created by a well-directed culture of Continuous Improvement.  It harvests the continuing upward trend of North American per worker productivity, the reliability of robust domestic supply chains, and the protection of solid intellectual property rights.

Coupled with the short lead times offered by a well-developed domestic transportation infrastructure, many Made In America businesses are successfully – and profitably – challenging the assumption that America cannot compete in a global environment.

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