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There are many reasons for companies to move manufacturing back to the U.S. Wages are rising in China, and many companies find it difficult to control the quality of goods made there. It takes a long time to make something overseas and then ship it back to the U.S, so locating in the U.S. can speed up production. In the U.S., companies can make small batches of goods, test consumer demand, and quickly adjust accordingly.
Darius Mir grew his business 9to5 Seating, which makes office chairs, by moving manufacturing from California to China in the early 2000s. But manufacturing in China became increasingly challenging. The global slowdown shuttered dozens of plants in China, and some skilled workers went home to their villages, Mir told me, so that the company had trouble finding good employees. What’s more, as China devalued its currency, 9to5 Seating had to spend more on wages because of the unfavorable exchange rate, making it less cost-efficient to produce goods in China.
Looking for solutions, Mir did some research and realized that if he could locate a plant somewhere in the central U.S., where he could ship goods to customers in a day, and if he could automate some jobs to save labor costs, producing chairs in the U.S. could work. Thanks in part to automation, he found, a task or order that would take 22 people in China can be done at the Tennessee plant with five. With the help of generous incentives, the company started manufacturing on 100,0000 square feet in Union City, Tennessee, where Goodyear had closed a massive plant in 2011. Mir is now adding 200,000 square feet of space to ramp up manufacturing in the company. (The U.S. part of the company is called Made In America Seating). He employs 40 people, and hopes to grow to 80 by the end of the year, and 500 within five years.
The average wage, Mir told me, will be $38,000 a year, and unskilled employees will start working at $11 an hour.
“A person would be able to without much experience or skills, would be able to start work in the region where we are from $9 to $11 or $12 an hour,” he told me. “We are keeping to the middle of that range.”
While wages of $12 an hour are much higher than Tennessee’s minimum wage of $7.25, they represent a significant drop in pay for jobs in manufacturing, which were once a pathway to America’s middle class. This is the disappointment of 21st-century onshoring: Though some of the jobs coming back to the U.S. require advanced degrees and skills, and are the good jobs pundits predicted would return, many are not.
