Finding the Manufacturing Floor
Jennifer Marks -- Gifts & Dec, June 23, 2008
When we started putting together a list of companies that are still making it in the USA, we were surprised at how long the list grew to be.
Sure, nearly all the big sheet and towel production is gone. Ditto the greige. And all the finished product suppliers we spoke with are importing components of what they make. Most have ownership stakes and/or joint ventures and/or exclusive production arrangements with off-shore manufacturers.
Still, after the turbulent years of globalization, it was fascinating to see how many companies had adjusted in ways that allowed them to continue with some aspect of domestic production.
It's not just here. In Canada, Cambridge is still cranking out towels. In Mexico, Kaltex remains a vertical operation exporting around the world, J.R. United owns a towel plant, and Welspun just opened a bedding facility.
Manufacturing on this continent is not what it was a decade ago — or three years ago, for that matter. But suppliers have found ways in which it makes sense in a globalized supply chain structure.
As we were talking with U.S. manufacturers for this report — and here let me offer my apologies to all of you we didn't get to — the Wall Street Journal came out with a story about manufacturers in other industries shifting some of their production back to the states.
"The cost of shipping a standard, 40-foot container from Asia to the East Coast has already tripled since 2000 and will double again as oil prices head toward $200 a barrel, says Jeff Rubin, chief economist at CIBC World Markets in Toronto. He estimates transportation costs are now the equivalent of a 9% tariff on goods coming into U.S. ports, compared with the equivalent of only 3% when oil was selling for $20 a barrel in 2000."
In the article, Rubin estimates that for every 10% increase in the distance of a trip, energy costs rise 4.5%.
Suppliers interviewed for the HTT piece also noted the leveling action of dollar devaluation and rising wages, especially in China, as well as the impact of energy shortages in major textiles-producing nations.
Not that anyone thinks there will a big build-up of U.S. textiles production. In fact, most U.S. suppliers said the boost to their domestic manufacturing has been slight to non-existent. As the Journal noted: "U.S. job losses in manufacturing have averaged 41,000 a month so far this year — nearly double the pace last year."
Some textiles manufacturers also pointed to the loss of domestic expertise — from immigration policies that minimize the number of workers skilled in the needle trades to the difficulty recruiting engineering-minded graduates into an industry that is less lucrative than many others.
Perhaps what has been achieved is a sort of balance, a sense of where U.S. production fits into the larger whole. As one supplier suggested, there may never again be a higher ceiling, but we seem to have found the floor.
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