The article, “Time
to Rethink Offshoring?” mirrors a discussion in my Policy in a Global Economy
class. We have just begun to touch on “the
pendulum swing” of US manufacturing jobs returning back to North America,
specifically those in the textile industry.
In the
McKinsey article, they cite “soaring oil prices, a falling dollar, and rising
wages”[1] as
reasons companies are reconsidering their global supply chains. In a similar article, “Analysis: Offshoring
not as advantageous as it used to be”, the article looks at additional reasons
including higher than expected administrative costs and fears of taking IT technologies
offshore for fear of property right infringements. [2]
Companies in
these “ seven broad groups of industries—machinery, computers and electronics,
appliances and electrical equipment, fabricated metals, furniture,
transportation goods, and plastic and rubber products—accounting for around 70
percent of the goods that the U.S. imports from China,” are most likely
to be reconsidering offshoring.[3]
Countries with the comparative advantage will produce
goods and there are always winner and losers in trade shifts. In the case that manufacturing shifts back to
the US this could mean US manufacturing workers are winners, along with those
concerned with reducing variability in supply chains. We have already learned
that variability is bad, reduction is therefore good. Variability of supply chains could decrease
in terms of transportation logistics, oil prices, and other cost or time reductions.
My questions
for this week then are…
Is
manufacturing shifting back to the US? What does this mean for global supply
chains?
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