Report: Outsourcing on its Way Out?

Kathryn Glass
FOX Business News
Monday, August 24, 2009

American companies that have long outsourced their manufacturing to countries like China where production is significantly cheaper, are considering ramping up production a little closer to home.

According to a report in The Wall Street Journal, companies like General Electric (GE: 14.21, 0, 0%), and Emerson, a St. Louis-based manufacturer of electrical equipment are relocating some of their manufacturing from Asia to the United States or Mexico, in an effort to better control production and inventory.

The paper interviewed Farouk Shami, owner of the hair-styling company that produces Chi flat irons, who recently decided to move his manufacturing from China to Houston, because he found he was spending close to $500,000 each month cracking down on the groups that seek to counterfeit his products.

In June, Jeffrey Immelt, CEO of GE, said in a speech about GE’s new Manufacturing Technology and Software Center that he thought American companies had done a little too much outsourcing. Immelt suggested that more firms should ramp up production, domestically.

“We should set a national goal to create high value added jobs and have manufacturing jobs be no less than 20 percent of total employment, about twice what it is today. And we should commit ourselves to compete and win with American exports,” Immelt said in that speech.

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