Domestic manufacturing coming back
There is much more.
In the wake of a decades-long manufacturing exodus overseas, the climbing cost of outsourcing has some U.S. companies looking homeward.
The Chinese yuan has appreciated 18 percent against the dollar in the past three years, making exports more expensive and less competitive. Chinese wages have more than doubled over the past five years, and the Chinese government has lowered or eliminated tax breaks on exports.
Meanwhile, oil prices have soared from $25 a barrel in 2002 to more than $125 today, discouraging American businesses from shipping manufacturing operations overseas.
“The days are over where you just think you can go over to China to get something cheap,” said Harry Kazazian, chief executive officer of Exxel Outdoors Inc., a Haleyville, Ala., producer of outdoor recreational gear.
Exxel has been doing just that since 2005, when executives detected the beginnings of a market shift favoring homemade wares.
“It's kind of like the light bulb goes off in your head,” Mr. Kazazian said.
“We really need to come back,” he told Exxel President Armen Kouleyan while they toured their production plants in China.
Colleagues raised their eyebrows at the plan, but Exxel soon began investing in its Haleyville, Ala., factory in preparation for a move back to the United States. The company increased the American portion of production of its best-selling family sleeping bag from 40 percent to more than 60 percent, said Mr. Kazazian. He plans to increase that to 90 percent by 2010. The company will produce 1.5 million sleeping bags this year and expects to make 2 million next year.
I am sure that everyone is pleased to see the return of domestic manufacturing. I know I am. But it raises a question that has to be uncomfortable to Democrats who hate energy. That manufacturing is going to take energy which means we will either have to import more oil and gas or we will have to exploit domestic resources.
Democrats hate exploration of oil. They hate new refineries. They hate nuclear energy. They hate coal as a fuel for energy. They hate shale oil. They don't like wind that much either. What are we going to do about the Democrat hate machine when it comes to energy production. It is something that has to be solved inorder to fuel this new domestic production.