Walmart, the nation’s largest retailer, earlier this year announced it will boost sourcing of U.S. products by $50 billion during the next 10 years. General Electric is investing $1 billion through 2014 to revitalize its U.S. appliances business and create more than 1,500 U.S. jobs.
Mom-and-pops are also engineering entire business strategies devoted to locally-made goods — everything from toys to housewares. It’s not simply patriotism and desire for perceived safer products that are altering shopping habits.
A painful realization has come for many Americans in the wake of the recession and still-flat recovery: All those cheap goods made in China and elsewhere come at a price. And that price is the lost U.S. manufacturing jobs. A growing pocket of consumers, in fact, are connecting the economic dots between their shopping carts — brimming with foreign-made stuff — and America’s future.
They’re calculating the trade-offs of paying more for locally made goods. “The Great Recession certainly brought that home, and highlighted the fact that so many jobs have been lost,” said James Cerruti, senior partner for strategy and research at consulting firm Brandlogic. “People have become aware of that.”
” ‘Made in the USA’ is known for one thing: quality,” said Robert von Goeben, co-founder of California-based Green Toys. All of their products from teething toys to blocks are made domestically and shipped to 75 countries.
“We are reaching a tipping point, where Americans are re-learning its competitive advantage,” von Goeben said. “It’s not about the cheapest product, but the best quality product.”
For many consumers, affordability has driven the bulk of purchasing decisions. Businesses in turn have ventured abroad for cheap labor and specific manufacturing skills to keep prices down.
So what’s driving big and small businesses to increase sourcing of U.S. products — beyond the obvious good public relations?
In short, a shift in global manufacturing that’s in the early stages. A combination of factors, including rising labor costs, are eroding China’s cost advantage as an export platform for North America.
Mexico, meanwhile, is rebounding as a manufacturing base, and wages there will be significantly lower than in China, according to a Boston Consulting Group report. By 2015, BCG forecasts that for many goods destined for North American consumers — manufacturing in some parts of the U.S. will be just as economical as manufacturing in China.
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