economics | January 07, 2013

Why Made In The U.S.A. Makes Sense: James Fallows & Charles Fishman

In December, an Atlantic cover story made quite a splash—and is continuing to make waves into the new year. James Fallows and Charles Fishman, contributors to the magazine, made convincing arguments to suggest that American manufacturing may be the way of the future. Outsourcing could soon be going out of style. Fallows, an expert on the Chinese economy, and Fishman, the author of the award-winning book The Wal-Mart Effect, claim that there are many reasons why a recent shift toward more insourcing and less offshore production will continue to pick up steam.

As Fishman has explained in his numerous media appearances since the release of the article, the previous reasons for manufacturing goods in China or Mexico are starting to become less beneficial than in the past. Manufacturing in the United States is becoming more appealing now that oil prices are skyrocketing and thus increasing shipping costs, natural gas costs are dropping and making it more viable to run an energy intensive factory in the U.S., and wages in China are five times what they were in 2000 and are rising at a rate of 18 per cent a year. Jobs in the United States are increasing, as is productivity—which is a clear indicator of the beginning of a trend towards a manufacturing revival. As Fallows explains: "a convergence of [these] trends makes operations in America more attractive and feasible, just as the cost and friction of operating in China is increasing." Not to mention, the life-cycle of products is becoming increasingly shortened which requires quicker turn around between manufacturing cycles—something that is not afforded by offshore production. Further, products are more intricate and difficult to construct which is harder to oversee from the other side of the world.

Both authors offered refreshing insights into this new trend, and explained what an insourcing boom would mean for the North American economy and trade relations. Fallows writes extensively about the Chinese economy and way of life both in The Atlantic and in his book China Airborne. He is the recipient of many major writing awards and delivers sweeping and informative keynotes on doing business (or perhaps now, doing less business) in China and what that means for both the East and West. As well as exploring public policy and business, Charles Fishman is an expert on water: its use, its misuse, and the important role that it will play in the future of our planet.

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