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Homeward bound? Firms mull return

Updated: 2012-07-23 09:28
By Shen Jingting, Chen Limin and Tuo Yannan ( China Daily)

Homeward bound? Firms mull return

Tim Cook (left), chief executive officer of Apple Inc, visiting the iPhone production line at the Foxconn Technology Group facility in Zhengzhou, in Central China's Henan province. Apple Inc now outsources most of its manufacturing to Taiwan-based Foxconn. [Photo/China Daily] 

Rising labor costs and cheaper US energy drive some companies back

It has taken 25 years to evolve from the brick-like dageda (big brother's handset) to the slim iPhone currently in vogue.

The first mobile phone, the Motorola 3200, entered the Chinese market in 1987 and marked the start of a craze that now sees them in nearly everyone's possession.

It is similar for other electronic products that first made their way to China from foreign companies and then began to be produced here en masse because of the country's huge and relatively cheap labor.

Soon the Middle Kingdom became the global manufacturing center after Japan. A random search of electronic products on a retailer's shelves now inevitably reveals "Made-in-China" labels or, at least, components produced in the country.

Now, however, some overseas companies are considering moving their manufacturing facilities out of China.

Heading home?

When US President Barack Obama joined Silicon Valley's top luminaries for dinner in California in early 2011, he asked the late Steve Jobs, the founder of Apple Inc, what it would take to start assembling iPhones in the United States.

Jobs' answer was quite straightforward and might have disappointed Obama. "Those jobs aren't coming back," he said, according to another dinner guest. However, one year on and after Jobs' death last year, Tim Cook, his successor as Apple's chief executive officer, gave Obama a more positive reply.

Cook said in a May interview in Rancho Palo Verdes, California, that he wanted the cellphones to be manufactured in the US. Although it would not be easy to achieve the goal, it was a clear hint that it may come to pass. And it fitted in with Obama's call for corporate America to reduce manufacturing outsourcing overseas, especially to China.

Some US companies have been on the move. The Michigan-based Whirlpool Corp, the world's No 1 home appliance maker with sales of $19 billion last year, brought back production of its KitchenAid hand mixers to the US. For the previous six years, a contractor in Huizhou, South China's Guangdong province, made them.

Company Chairman and Chief Executive Officer Jeff Fettig said in order to fulfill the company's commitment to produce in the US and cater to local customers' needs, Whirlpool decided to move some product lines back to the US.

The shift created a net gain of about 25 job opportunities in the US, the Wall Street Journal reported. In contrast to Whirlpool's total 68,000 employees across the world, the figure is tiny.

General Electric Co plans to invest $1 billion by 2014 to upgrade product lines and create new factories for items not previously made in the US. The company is about to add hundreds of employees to its sprawling Appliance Park operations in Louisville, Kentucky, this year.

Similar moves by Otis Elevator Co, Caterpillar Inc and Ford Motor Co, have created a few thousand more positions in the US.

The examples above may be just a beginning. According to findings by the Boston Consulting Group, more than a third of US-based manufacturing executives at companies with sales greater than $1 billion are planning to bring back production to the US from China - or are considering it.

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