With a US political season approaching, we will hear – once again – a rising tide of voices decrying manufacturers moving jobs overseas. However, National Association of Manufacturers and Manufacturing Institute research proves that most US-based manufacturers that build overseas do so to gain entrance into emerging markets, and that 90 percent of their production stays in those regional markets.
Take a look at what is happening with John Deere's new factory in India. India is one of the fastest growing markets in the world, second only to China, and by many estimates will surpass China in total population by 2020. Oh yes, lest we forget, in late 2010 Deere announced a new factory to serve the Chinese market as well. And what's this – a new factory in Russia in 2009?
While it may be helpful to politicians to exploit fears for their own campaign purposes, it does not help commerce and growth. We need to look beyond the campaign rhetoric and realize that any economy needs a vibrant manufacturing sector, and any large company needs access to new and expanding markets. This is not a zero-sum game. When Deere expands overseas, it is expanding its pie, not carving out some of the American pie and sending it to India, China or Russia. To be sure, these new plants will mean an increase for American manufacturing because parts and component assemblies will be sent over to these new factories.
At SAS we are proud to serve manufacturers all around the globe, and we are proud to be a truly international company with more than half of our revenues coming from outside the US. Just like the manufacturers we serve, we are global because manufacturing is global. Whether it is a pharmaceutical manufacturer in Switzerland, a beverage manufacturer in Brazil, an automotive manufacturer in China or a cement manufacturer in India, what they have in common is a need to utilize and aggregate data, analyze it, and optimize their operations.
I would be happier to have the politicians focus on expanding the world pie instead of setting up "us" versus "them." Do you think that might happen in 2012? What are the probabilities?
2 Comments
Key point, Japan also "makes" car in US where the market is located. But they hold back key precision manufactured components in Japan. However, China is demanding the US manufacturers move their development and high tech parts to China as well. Intel is smart enough to keep the key IP processes in US, older technology and assembly type manufacturing in Asia.
Good point Mike. It is clearly not a perfectly balenced world of trade and political realities will always be with us. Cars.com does an American made index every year. Last year, the Camry and Accord were 1 & 2. http://bit.ly/hN2IWh