Those who say manufacturing jobs will never return to the West don't know what they are talking about. Either that or they are purposely being disingenuous because it is the only way they can justify outsourcing decisions focused on the realization of short-term objectives.
Manufacturers unwittingly created a monster when they began transferring manufacturing to China about two decades ago. The process, while initially favorable to everyone, today threatens to completely drain production from other parts of the world (and not just the West) in favor of China, creating a lopsided environment that should be anathema to any supply chain management guru and business executive.
It's pure insanity for a manufacturer to locate all production resources in a single part of the globe, and yet that is what the high-tech industry and many other manufacturing sectors of the global economy celebrate in China today. Recent discussions about conditions at facilities in China manufacturing products for Apple Inc. (Nasdaq: AAPL) and other major OEMs are, in my opinion, misplaced. While the focus on alleged labor and human rights violations is pertinent, Apple executives and other supply chain professionals in the high-tech industry should also be looking at the potential production snafus that would occur if disruptions in China were to halt their activities in the region.
This is why I disagree with Steve Jobs, the late Apple CEO and chairman, who reportedly told President Obama manufacturing jobs won't ever return to the United States and western countries. In time we will know how accurate his prediction was, but personally I am convinced manufacturing jobs will migrate back to the West and that the torrential outsourcing of production to China will eventually slow to a trickle. The current system is unsustainable and will unravel as it becomes clear we have created an unusual, highly faulty, unsupportable, and potentially dangerous supply chain management condition.
The massive outsourcing to China by businesses threatens to inflict significant damages upon many regions of the global economy. There are major geo-political implications for the rest of the world in this manufacturing shift, and we are already witnessing some of these in the hollowing out of communities and growing production unemployment worldwide. The solution advanced by many that the US and Europe could instead focus on higher-end design and services job is faulty. Chinese workers desire these jobs, too, and the country is already taking steps to advance opportunities for its citizens in finance, services, and high-tech design.
That China sits astride the global manufacturing sector is indisputable. It has for the last two decades been winning outsourcing contracts from foreign manufacturers for its factories and setting off controversies in developed economies in Europe and North America over vanishing jobs and emasculated municipalities.
But this is not a political diatribe. The West operates a capitalist system, and probably the best reasons for the position I take here is that the current system violates so many time-tested norms of the capitalist economy. The outsourcing of production to China will slowly decrease over the next years, and eventually some high-end manufacturing activities will begin to migrate back westward. This may be a controversial position today, but I am fully convinced we will one day see a revival in the manufacturing economies in Europe, North America, and other parts of the globe.
In my next blog I will expand on this and advance five reasons I believe manufacturing jobs will eventually start growing again in the West.