Look Who’s “Committed” To American Manufacturing!

Can you guess which corporation hosted a summit last week to discuss its “commitment” to leading a renaissance in American manufacturing?

Boeing, perhaps? Or Exxon Mobil? Or General Motors?

No … it was Walmart! The world’s largest retailer gathered 500 suppliers and numerous government officials in Orlando to promote and coordinate its current “Made In America” initiative.

Can you detect any irony in Walmart’s announcement of this project? The retailer, after all, arguably bears more responsibility than any other firm for the shift of American industrial capacity to China, particularly in the consumer product sector.

It would be wrong to dismiss this conference as corporate propaganda, though. In fact, several global economic trends now favor a pronounced shift in production from China to the United States.

The first trend involves energy. America is poised to become the largest producer of energy on earth. Although the advent of fracking invokes significant environmental risks, a large and growing market of locally produced energy can dramatically reduce the cost of domestic production.

The second trend involves technology. Noteworthy advances in robotics and other industrial sciences have minimized the need for human labor in production processes. Thus, although American wages remain higher than Chinese wages, United States manufacturers are “getting by” with fewer and fewer labor hours.

The third trend involves labor supply. Whereas Chinese manufacturers are grappling with immense labor shortages that are driving up wages, American manufacturers are operating in a business environment with high rates of unemployment and stagnant wages.

Thus, although American manufacturers are “making do” with far less human labor and far more technology than in the past, the rate differential for the work hours that cannot be eliminated is narrowing between the nations.

In other words, several explicit economic trends are driving the new competitiveness of America’s manufacturing industry. As a result, although Walmart’s Made In America campaign may be immersed in patriotic overtones, it is actually based on a strong fundamental business strategy.