Outsourcing is Becoming Out of Bounds

urlWhile all of the manufacturing jobs that were outsourced to the Far East may not be coming home, it seems some of these jobs might be returning to their origin company. The Journal of Commerce is reporting that some manufacturing companies in Europe, that originally outsourced jobs to China, are beginning to bring those jobs back to Europe. It seems that these European companies are beginning to realize the difficulties of outsourcing to China. In the past year, the expenses for Chinese production of products and the time it took to ship those products cut deeply into the profits. With international shipping issues ranging from capacity or higher ocean freight shipping rates, it seems that China might not be the most efficient place for manufacturing products and shipping them as less-than-container (LCL) load.

The United States understands the sting of outsourcing as well as any nation. It has been projected that the United States lost 3.2 million jobs since 2001 because of outsourcing. 3 out of those 4 jobs lost were manufacturing. There has also been a growing trade deficit during that time between the US and China, which has been the main destination for outsourced jobs. For two years now, the US has seen a growth in the practice of insourcing, which are former outsourced jobs returning home. The major reasons for this trend include higher wages for Chinese workers and better transportation costs. It seems that by sending the jobs home and working with a freight forwarder to handle domestic shipping, manufacturing companies might lower expenses. At the very least, the recent port congestion on the West Coast might be another harsh result of outsourcing jobs overseas. Companies that manufacture within the US avoided the port congestion problems.

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