"Made in the USA" is back, baby Dec 06 2012
Earlier this morning in a post about Apple manufacturing their products in the US, I wrote "look for this "made in the USA" thing to turn into a trend". Well, Made in the USA is already emerging as a trend in the media. On Tuesday, Farhad Manjoo wrote about American Giant, a company who makes the world's best hoodie entirely in the US for a decent price.
For one thing, Winthrop had figured out a way to do what most people in the apparel industry consider impossible: He's making clothes entirely in the United States, and he's doing so at costs that aren't prohibitive. American Apparel does something similar, of course, but not especially profitably, and its clothes are very low quality. Winthrop, on the other hand, has found a way to make apparel that harks back to the industry's heyday, when clothes used to be made to last. "I grew up with a sweatshirt that my father had given me from the U.S. Navy back in the '50s, and it's still in my closet," he told me. "It was this fantastic, classic American-made garment -- it looks better today than it did 35, 40 years ago, because like an old pair of denim, it has taken on a very personal quality over the years."
The Atlantic has a pair of articles in their December issue, Charles Fishman's The Insourcing Boom:
Yet this year, something curious and hopeful has begun to happen, something that cannot be explained merely by the ebbing of the Great Recession, and with it the cyclical return of recently laid-off workers. On February 10, [General Electric's Appliance Park in Louisville, KY] opened an all-new assembly line in Building 2 -- largely dormant for 14 years -- to make cutting-edge, low-energy water heaters. It was the first new assembly line at Appliance Park in 55 years -- and the water heaters it began making had previously been made for GE in a Chinese contract factory.
On March 20, just 39 days later, Appliance Park opened a second new assembly line, this one in Building 5, to make new high-tech French-door refrigerators. The top-end model can sense the size of the container you place beneath its purified-water spigot, and shuts the spigot off automatically when the container is full. These refrigerators are the latest versions of a style that for years has been made in Mexico.
Another assembly line is under construction in Building 3, to make a new stainless-steel dishwasher starting in early 2013. Building 1 is getting an assembly line to make the trendy front-loading washers and matching dryers Americans are enamored of; GE has never before made those in the United States. And Appliance Park already has new plastics-manufacturing facilities to make parts for these appliances, including simple items like the plastic-coated wire racks that go in the dishwashers.
and James Fallows' Mr. China Comes to America:
What I saw at these Chinese sites was surprisingly different from what I'd seen on previous factory tours, reflecting the political, economic, technological, and especially social pressures that are roiling China now. In conjunction with significant changes in the American business and technological landscape that I recently saw in San Francisco, these changes portend better possibilities for American manufacturers and American job growth than at any other time since Rust Belt desolation and the hollowing-out of the American working class came to seem the grim inevitabilities of the globalized industrial age.
For the first time in memory, I've heard "product people" sound optimistic about hardware projects they want to launch and facilities they want to build not just in Asia but also in the United States. When I visited factories in the upper Midwest for magazine stories in the early 1980s, "manufacturing in America" was already becoming synonymous with "Rust Belt" and "sunset industry." Ambitious, well-educated people who had a choice were already headed for cleaner, faster-growing possibilities -- in consulting, finance, software, biotech, anything but things. At the start of the '80s, about one American worker in five had a job in the manufacturing sector. Now it's about one in 10.
Add to that all of the activity on Etsy and the many manufactured-goods projects on Kickstarter that are going "Made in the USA" (like Flint & Tinder underwear (buy now!)) and yeah, this is definitely a thing.
As noted by Fishman in his piece, one of the reasons US manufacturing is competitive again is the low price of natural gas. From a piece in SupplyChainDigest in October:
Several industries, noticeable chemicals and fertilizers, use lots of natural gas. Fracking and other unconventional techniques have already unlocked huge supplies of natural gas, which is why natural gas prices in the US are at historic lows and much lower than the rest of the world.
Right now, nat gas prices are under $3.00 per thousand cubic, down dramatically from about three times that in 2008 and even higher in 2006. Meanwhile, natural gas prices are about $10.00 right now in Europe and $15.00 in parts of Asia.
Much of the growing natural gas reserves come from the Marcellus shale formation that runs through Western New York and Pennsylvania, Southeast Ohio, and most of West Virginia. North Dakota in the upper Midwest also is developing into a major supplier of both oil and natural gas.
So basically, energy in the US is cheap right now and will likely remain cheap for years to come because hydraulic fracturing (aka fracking aka that thing that people say makes their water taste bad, among other issues) has unlocked vast and previously unavailable reserves of oil and natural gas that will take years to fully exploit. A recent report by the International Energy Agency suggests that the US is on track to become the world's biggest oil producer by 2020 (passing both Saudi Arabia and Russia) and could be "all but self-sufficient" in energy by 2030.
By about 2020, the United States will overtake Saudi Arabia as the world's largest oil producer and put North America as a whole on track to become a net exporter of oil as soon as 2030, according to a report from the International Energy Agency.
The change would dramatically alter the face of global oil markets, placing the U.S., which currently imports about 45 percent of the oil it uses and about 20 percent of its total energy needs, in a position of unexpected power. The nation likely will become "all but self-sufficient" in energy by 2030, representing "a dramatic reversal of the trend seen in most other energy-importing countries," the IEA survey says.
So yay for "Made in the USA" but all this cheap energy could wreak havoc on the environment, hinder development of greener alternatives to fossil fuels (the only way green will win is to compete on price), and "artificially" prop up a US economy that otherwise might be stagnating. (thx, @rfburton, @JordanRVance, @technorav)