Lean Brings Labor Back to North America

If manufacturing in the 2000s could be summed up in one-word, it would be “expense.” Companies in North America explored a variety of options to minimize production costs and maximize returns on investments. This resulted in millions of manufacturing jobs being shipped to emerging markets, such as China and India. In fact, a report from Statistics Canada suggests approximately one-third of the manufacturing jobs in the country were shipped overseas between 2001 and 2010.

However, manufacturers are quickly beginning to learn that this inexpensive labor isn't as cost-efficient as they previously thought. High rates of defects damper ROI, social and labor issues create PR nightmares, shipping and logistics are more difficult to deal with and the lack of security measures put critical information in jeopardy. Many companies in the industry are beginning to rethink the use of overseas workers because of the number of risks associated with it.

“China's overwhelming manufacturing cost advantage over the U.S. is shrinking fast. Within five years … rising Chinese wages, higher U.S. productivity, a weaker dollar and other factors will virtually close the cost gap between the U.S. and China for many goods consumed in North America,” a report from Boston Consulting Group notes, as cited by the Financial Post.

As a result, many big-name manufacturers are bringing production back to North America. By leveraging Lean manufacturing, companies are able to mitigate more expensive labor and production costs. Even though North American businesses need to pay laborers more, by eliminating wastes, they are actually saving money in the long run.

For example, consumer electronics giant Apple is planning to shift upward of $100 million worth of manufacturing and production in Mac computers back to the United States. Most of this business is coming from China, the market which Apple has relied on for close to a decade now.

“The opportunities are many, whether it’s producing customized machinery for major industrial companies, limited-run custom fashions, or specialized delicacies for restaurants,” the news source added. “The combination of advancing technologies and increasingly specialized markets makes this the age of specialization – and a huge opportunity for entrepreneurs who know how to run a tight ship.”

Lean manufacturing is one of the most potent practices for maximizing revenue. By eliminating waste, businesses are better positioned to improve efficiency, reduce costs and bolster product quality.