6 Reasons to Keep Manufacturing Local in the United States

History has shown that in an increasingly-standardized world, people that preserve a unique businesses model and a distinctive character experience a distinctive economic advantage. We firmly aspire to the philosophy that we can all do it so much better right here in America!

In the most recent data, manufacturers contributed $2.17 trillion to the U.S. economy in 2015. This figure has risen since the second quarter of 2009, when manufacturers contributed $1.70 trillion. Over that same time frame, value-added output from durable goods manufacturing grew from $0.87 trillion to $1.18 trillion, with nondurable goods output, up from $0.85 trillion to $0.99 trillion. In 2015, manufacturing accounted for 12.1 percent of gross domestic product in the economy. (Source: Bureau of Economic Analysis.)

According to non-profit advocacy group the Reshoring Initiative, offshoring resulted in a net loss of approximately 220,000 manufacturing jobs between 2000 and 2003. However, according to the group, the country added approximately as many jobs due to foreign investment and reshoring as it lost to offshoring in 2015. Some of the largest U.S.-based companies like Walmart, Ford, and Boeing have begun building factories domestically for operations that would likely have gone overseas a few years ago.

Reason 1: Local Decision Making

Local ownership ensures that essential decisions are made locally by people who live, work and prosper in the community, and – therefore – will personally feel the impacts of their decisions. The local shops where these owners buy their groceries, service their vehicles, groom their pets, and attend to their healthcare are all directly and confidentially tied to the prosperity of their business and prosperity of their employees.

Reason 2: Keeping Dollars in the Local Economy

Compared to large box chain stores, locally-owned businesses recycle a much larger share of their revenue back into the local economy, enriching the entire community. Small-scale, locally owned businesses create communities that are more prosperous, entrepreneurial, connected, and generally better off across a wide range of metrics. These earned dollars are recirculated daily throughout the local community of businesses and families.

Reason 3: Job and Wages

Locally-owned businesses create more jobs locally and, in some sectors, provide better wages and benefits than chains do. Studies show that locally-owned businesses are linked to higher income growth and lower levels of poverty, while big-box retailers – particularly Walmart – depress wages and benefits for retail employees. Studies in this section also quantify the costs of these big companies’ low wages to state healthcare programs and other forms of public assistance.

Reason 4: Strong Middle-Class Jobs

Average manufacturing wages in the U.S. have experienced a sharp upswing, currently averaging an all-time high of $20.59 per hour including benefits as reported by the U.S. Bureau of Labor Statistics. And 95% of the jobs come with health insurance. Factories pay better than retail and food service.

Reason 5: Local, Local, Local

Local business ownership ensures that important decisions are made locally by people who live in the community and who will feel the impacts of those decisions. Having skin in the game really matters not only to the person making the decisions but to the multitude of employees and families affected by those decisions. Owners with integrity and character care about those people, their livelihood and their wellbeing, and make decisions accordingly.

Reason 6: Competition

A marketplace encompassing tens-of-thousands of small businesses is the best way to ensure innovation and low prices over the long term. A multitude of small businesses, each selecting products based not on a national sales plan, but on their own local interests and the needs of their local customers and employees, guarantees a much broader range of product choices and diversity.

The Wrap Up

In the last decade, the U.S. has lost millions of manufacturing jobs to outsourcing. According to U.S. News and World Report, there are now 5.1 million fewer American manufacturing jobs than in 2001. Attractively, this dynamic is changing in recent years as we witness more manufacturing jobs returning to U.S. soil while manufacturing wages are on the rise. Total output from American manufacturing relative to gross domestic product (GDP) is back to pre-recession levels in 2016, with more than half-a-million new jobs having been created. According to the Reshoring Initiative, 15% of this job growth results from reshoring. There remains hope for the renewed prosperity of this nation that our previous generations fought and died for.