The Insourcing Boom

The Insourcing Boom

An economic axiom has prevailed that America would  never again be able to compete for manufacturing jobs against rival countries with their rock-bottom labour costs.   This Atlantic article talks about General Electric and their storied Kentucky ‘Appliance Park’.  This manufacturing mecca from long ago is awakening as companies realize that their strategy to outsource everything to Asia is not as sound as once believed.

The key takeaway for me was that markets (including labour markets) have a remarkable ability to adapt.   Not only do markets adapt, but human beings seem hardwired to repeatedly underestimate the ability of markets to adapt.  Anything you can read to be reminded of markets ability to adapt is worth reading.  Make time for this article.

Excerpt from the article:

What has happened? Just five years ago, not to mention 10 or 20 years ago, the unchallenged logic of the global economy was that you couldn’t manufacture much besides a fast-food hamburger in the United States. Now the CEO of America’s leading industrial manufacturing company says it’s not Appliance Park that’s obsolete—it’s offshoring that is.

Why does it suddenly make irresistible business sense to build not just dishwashers in Appliance Park, but dishwasher racks as well?

 

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