It is dangerous to extrapolate a trend from isolated reports, especially in a volatile environment such as the current world economy. It may be just as dangerous to ignore anecdotes concerning a change in a major trend. Fortunately, Auric Goldfinger provides a rule for just this problem:
“Once is happenstance. Twice is coincidence. The third time it’s enemy action.”
It was happenstance that a post last September cited William J. Holstein pegging a new trend of high tech manufacturing returning to the US:
“China is no longer cheap, and long supply chains are too slow”
It was coincidence that this morning the Wall Street Journal featured an article (John Bussey, “Will Costs Drive Firms Home”) suggesting a new trend of manufacturing returning to the US from low cost venues overseas:
A combination of forces – rapidly rising labor rates abroad, loftier materials and shipping costs, deep-discount tax incentives from U.S. states – are changing some of the calculations by which companies decide to move production abroad, or even keep what’s there now.
Is it enemy action that David Foster blogged citing the fall in value of the dollar and inflation in China as having:
the same effect of making U.S. manufacturing generally more competitive.
Foster then highlights concerns about government policies in the US which would counteract any trend towards a manufacturing resurgence here.
Finally a companion WSJ piece (Timothy Aeppel, “Candle Maker Feels Burned”) explores the travails of one firm moving production from China to Baltimore. The reason for the move according to owner Mei Xu is “to do well in this market, you need to be able to produce and ship the next day.” What Xu ran into was a mass of conflicting and overlapping regulations which delayed and increased the costs of opening the new plant. Her conclusions:
I think our government needs to ask itself, “Are we ready for business to come back from Asia?”
She thinks there ought to be a “concierge service” for small businesses seeking to move jobs to the U.S.
So it would appear conditions a right for a new trend of manufacturing relocating to the US – a trend which will be reduced by regulation and government apathy. The real question is whether governments in the US will take Xu up on her challenge to create a concierge service for job creation. At least one government has, Governor Walker of Wisconsin reorganized the state’s Department of Commerce to be a one stop shop for jobs creation. Maybe more will follow.