economics | December 05, 2012

Made In America: Charles Fishman Discusses The Insourcing Boom On CNBC

Fresh off the success of his highly touted Atlantic cover story, Charles Fishman was recently interviewed by CNBC on the return of industry to America. In the interview, he explains how General Electric—the major appliance company—has begun to see the benefits of bringing manufacturing back to U.S. soil because outsouring their labor isn't saving them the money they thought it would. The company's decision to move much of its appliance manufacturing operations out of China is starting a trend, he says, and it won't be long until other companies begin to catch on.

"A company like G.E. has done the math," Fishman says. "Transportation costs are higher [overseas], labor costs are higher overseas, and markets in [America] move much more quickly."  While companies once thought that lower labor costs overseas would help keep overall production costs down, they have recently come to the realization that labor costs are only one part—and a small part, at that—of the overall equation. What they are discovering is that despite labor and wage costs being lower in other countries—though, these costs are indeed rising dramatically—the high costs and long waits to ship products from China to the U.S. end up costing them more than anticipated. Companies want to be able to constantly put new, updated products onto the shelves, he explains—and that is next to impossible when the goods are being shipped from across the world. "It takes five weeks to get finished products to the U.S. from China," Fishman notes. "From the factory they are reviving in Kentucky [however], it takes G.E. 19 minutes to get the products into the warehouse, ready to distribute."

Fishman also says that making the products in American factories allows companies to fine-tune their methods and use the manufacturing process as a research and development venture. By making the products at home, the company can find ways to make the products better and develop new, innovative products in the future in real-time. All of this adds up to something Americans are clamouring for—more jobs. As well as being a celebrated and respected journalist and speaker on business strategy and manufacturing, Fishman is an expert on social responsibility and water usage. His bestselling book, The Big Thirst, challenges us to think differently about the natural resource—before it's too late.

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