Many American businesses are returning a large proportion of their manufacturing to the US. This is called Reshoring. KitchenAid for example has moved much of its overseas manufacturing back to Cleveland Ohio. There are 4 vital lessons for Australian manufacturing here. See below.
Main reasons for the move were:
Rising overseas labour costs
Logistics became more expensive as fuel prices increased
A slow 2 month turnaround time when demand changed for a product
The US operation was built to be lean and smart
Such overseas competition forced the company to become more efficient. Products that were previous made in 2 stages are now made in 6 allowing for faster and more cost effective assembly. This adoption of lean manufacturing principles is a good thing. Other US companies such as General Electric are also re-establishing US manufacturing facilities.
There are lessons here for Australia businesses around crunching the numbers before assuming OS is better and the need to continually work on efficiencies. Read our recent blogs: Time to Smarten Up: The Why and How of Smart Factories and The 5 Hottest Manufacturing Trends: Don't get Left Behind to get some tips on how to continuously improve.
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