WASHINGTON – Big manufacturers moved their production out of the country too quickly over the past decades and now see a competitive advantage in building up their footprints back home, top executives said on Monday.
The chase for lower-paid workers drove the migration, which resulted in employment in the U.S. manufacturing sector falling by 40 percent from its 1980 peak. But big companies including Boeing Co. and General Electric Co. are now finding that the benefit of lower wages can be offset by higher logistics and materials costs.
“We, lemming-like, over the last 15 years extended our supply chains a little too far globally in the name of low cost,” said Jim McNerney, CEO of world No. 2 planemaker Boeing. “We lost control in some cases over quality and service when we did that, we underestimated in some cases the value of our workers back here.”
Boeing in particular ran into extensive delays in the launch of its 787 Dreamliner aircraft, handing off much of the manufacturing responsibility to outside suppliers, leaving the launch of the fuel-efficient aircraft some three years behind schedule.
“You are going to see more (manufacturing) come back to the United States, and that’s in part for business reasons and in part because we want to be good citizens,” McNerney said.
McNerney spoke at a Washington event organized by GE aimed at promoting the competitiveness of the U.S. economy. The nation has been slow to recover from a brutal 2007-2009 downturn and high unemployment – 8.3 percent in January – stands as one of the main barriers to a brisker recovery.