June 3, 2013 Leave a comment
On May 29th, 2013, Motorola announced the opening of a manufacturing plant in Fort Worth, Texas to produce its new product, the Moto X. Motorola estimates that the plant will generate roughly 2,000 American jobs. Texas Governor Rick Perry supports Motorola’s initiative, stating, “Motorola Mobility’s decision to manufacture its new smartphone and create thousands of new jobs in Texas is great news for our growing state.”
Motorola’s decision is especially significant in the modern age of dominant overseas outsourcing. Moto X will be the first smartphone manufactured entirely in the United States. Will Moss, a spokesman for Motorola Mobility, explains that producing the Moto X in the United States will engender “much leaner, more efficient operations” by moving Motorola’s manufacturing operations “much closer to our key customers and partners as well as our end users.” Other technology firms have been following this same trend. For example, in December, Apple CEO Tim Cook announced plans to move the manufacturing of an existing line of Mac computers to the United States within the coming year.
Although some experts believe that these companies’ efforts are primarily politically motivated, other reasoning may exist to explain recent attempts to bring manufacturing opportunities back to the United States. A recent Gallup poll determined that 64% of Americans are willing to pay more for a product produced in the U.S. as opposed to overseas. Additionally, wage increases have led to rising production costs for companies located in East Asia. Economist Dan North predicts that the difference in labor costs between China and the United States could decrease to only $7 per hour by 2015 (as opposed to the $17 difference reported in 2006), as the Chinese economy strengthens and Chinese workers push for higher salaries.
It is still unclear if the “Manufacturing Renaissance” will generate enduring consequences for the U.S. economy—an increase in U.S. industrial production has yet to occur. According to the Federal Reserve, industrial production fell by 0.5 percent in April. Furthermore, although the total number of manufacturing jobs in the United States has increased by 520,000 since January 2010, only 50,000 of those jobs are due to re-shoring. It is therefore disputable as to whether efforts to bring manufacturing back to the U.S. will contribute to profound and lasting benefits for the U.S. economy, or if companies’ current efforts in this capacity will merely amount to a short-lived phase.
Posted by: Marjorie Baker
Sources: The Washington Post, CBS News, Businessweek, the Federal Reserve, Gallup, Huffington Post