Manufacturing productivity has steadily increased in the United States because of the rapidly increasing use and reliance on machines, computers, and other types of technology hardware. Over the last decade, American industrial businesses that have prospered, all did so due to a consistent theme – the businesses operated using the highest automation processes possible and the company’s technology content remained consistently high. Proof of the benefits of automation lies in the following statistic: Manufacturing output per hour between 2010 and 2011 increased close to forty percent. Moreover, the need for greater technological content for products, and for machinery that continues to improve and become more advanced requires advanced support, as arising issues become more technical and complicated. This can be managed through the implementation of improved skills training, IT maintenance, operational functionality, and companywide services. IBM, for example, sells more services related to its product line than selling of the actual hardware. The large scale utilization of IT hardware, like computers, has created demand for IT services in almost all industries.
In order to increase overall operational efficiency, most American industrial; businesses began outsourcing services previously performed in-house, such as parts manufacturing, product maintenance, IT operations, and payroll services. The introduction of contract manufacturing has made it possible for many businesses to operate without actually owning any brick-and-mortar plants, facilities, and warehouses. In addition, a growing number of manufacturers have increased the efficiency of their assets by leasing, rather than owning equipment and factories. The exorbitant amount of resources required for the majority of industrial enterprises, encourage manufacturers to ally with other companies. Alliances are subsequently formed, which works towards strengthening both parties.
The development of international logistical solution networks that can efficiently deliver raw materials and finished products to practically any location in the world has dramatically increased the scope and reach of American manufacturers. Today, several United States manufacturers place nearly all of its production facilities overseas. Factories where production occurs are often located in certain countries due to the tax laws and labor costs that are more lenient than what the United States currently has in place.
Some foreign nations are finally beginning to increase the wages of its workers, which reduces the advantage of moving facilities abroad. Because this negatively affects the overall running of the manufacturing supply chains are causing, some American manufacturers are starting to feel as though the work put into building factories overseas is no longer worth the effort. The good news for the U.S. is this will start to bring back jobs that were previously outsourced to other countries. The phenomenon, which has been dubbed “re-shoring,” hit a milestone just last year when the United States were returned roughly the same number of jobs as left the country, according to the Re-shoring Initiative.