Don’t be surprised if you see more ‘Made In The USA’ tags in the future. There are two trends that might combine to make this a reality. The bad news is that while the tag might come back to the US, don’t plan to apply for those manufacturing jobs-there might not be any left for you. A little bit of background first before we outline the big picture. Electronics manufacturing has gradually become a Chinese game in the past two decades. This is not exactly surprising since much of the process of manufacturing electronic gadgets involved fitting screens, moving parts together, and gauging to see if one part fits another. In other words, jobs that required lots of judgment calls and on the spot analyses-jobs that need a brain. Since it costs so much less to manufacture in China and the transport infrastructure from factory to port to US consumer is so streamlined, it seems everyone and their dog moved to China for manufacturing.
From heavyweight HP to Dell to Apple, most hardware manufacturers moved to the land of the Dragon to take advantage of cheap labor and efficient systems. Such efficient manufacturing just can’t be pulled off in the US due to more expensive labor.
Fast-forward to now and the trend might reverse. How? Two trends might bring manufacturing back to US shores. First, the extraction of oil shale and oil sand has become quite economical due to technology breakthroughs. As forecast by Niall Fergusson, this might mean that the United States will become an energy exporter-the world’s largest. More importantly, the abundance of energy means it can generate electricity at a fraction of its current cost. High tech hardware manufacturing consumes a lot of energy due to electricity-hungry machines like robots. Which brings up the second trend that might push manufacturing back to the US: the rise of robots. Manufacturing robots used to be reserved for fairly insensitive work where not much analysis and precision were required. Now, the latest generation of robots are so sensitive and so ‘smart’ that they can relieve most human workers of their jobs. Pair this trend with very cheap energy and you can quickly see why high tech companies like Apple, Dell, and HP might want to go back to the US for manufacturing since the negatives of doing business in China will outweigh the positives.
For instance, you won’t be dealing with a totalitarian government or an increasingly restless workforce (as seen in the Foxconn fiasco). It will definitely be interesting to see how these two trends mesh together. Just don’t expect these trends to create much jobs since the high level of automation pretty much ensures the area of job growth will be in marketing these gadgets instead of manufacturing.