Insourcing Solutions: More Prevalent Than You Think

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Just how prevalent is insourcing in the United States? Very. For years, the trend in American companies has been outsource, outsource, outsource. Companies have been taking advantage of the cheaper labor in other countries like China, Japan, or Mexico for decades. And what was the rationale used by these companies to justify outsourcing rather than finding insourcing solutions? Cheaper cost of production means the savings get passed along to the customer.

But, there is evidence that the tides could be changing. In recents months, major manufacturers have expanded their U.S. facilities or even are moving manufacturing operations back to America. While labor costs may still be lower in China and other popular outsourcing sites, they are rising. And on American shores, the cost of manufacturing is improving. Productivity is rising, and workers are more efficient than ever. Plus, U.S.-based manufacturers are seeing the positive impacts from the lowered cost of energy production, thanks to a surge in natural gas production.

Here are some facts about insourcing, by the numbers:

  • $154.2 billion: Amount invested on construction and equipment by U.S. subsidiaries
  • 13%: Increase in the productivity of American workers
  • $146 billion: Amount of trade surplus the U.S. was poised to hit in 2010
  • 2 million: New employees hired by private companies in 2011
  • 18%: Increase in business investment since 2009
  • Over $2 trillion: Total of American exports in 2011
  • 334,000: Manufacturing jobs added through the last two years
  • $228 billion: Amount invested in American operations by private companies in 2010

The US Government can encourage more insourcing solutions by creating business incentives for expansion, ensure American access to global markets, promote the education and training of the people, and provide support financially and technically so companies can grow. And what can your small business do to help along this healthy trend of American insourcing?