The Insourcing Boom: After Years of Offshore Production, General Electric Is Moving Some Manufacturing Home. It Is Not Alone
After decades of outsourcing manufacturing facilities overseas and Mexico, American companies are moving there factories back. There are many reasons, not the lest of which is the reality the most advanced manufacturing technology has been developed here. The entire manufacturing process is changing- think 3D printing of just about anything. Couple that with unequaled communication technology and production techniques and the economics become clear: It is more cost effective to do business here.
Obviously, not all offshore manufacturing concerns can take advantage of these new technologies in the same way GE can. Labor intensive manufacturers of clothing and some electronic devices for example will still be made overseas or in Mexico, but that too will change in time. As the various new technologies becomes becomes more readily available and adapted and filter down to ‘smaller processes,’ that too, will change.
For much of the past decade, General Electric’s storied Appliance Park, in Louisville, Kentucky, appeared less like a monument to American manufacturing prowess than a memorial to it.
The very scale of the place seemed to underscore its irrelevance. Six factory buildings, each one the size of a large suburban shopping mall, line up neatly in a row. The parking lot in front of them measures a mile long and has its own traffic lights, built to control the chaos that once accompanied shift change. But in 2011, Appliance Park employed not even a tenth of the people it did in its heyday. The vast majority of the lot’s spaces were empty; the traffic lights looked forlorn.
In 1951, when General Electric designed the industrial park, the company’s ambition was as big as the place itself; GE didn’t build an appliance factory so much as an appliance city. Five of the six factory buildings were part of the original plan, and early on Appliance Park had a dedicated power plant, its own fire department, and the first computer ever used in a factory. The facility was so large that it got its own ZIP code (40225). It was the headquarters for GE’s appliance division, as well as the place where just about all of the appliances were made.
By 1955, Appliance Park employed 16,000 workers. By the 1960s, the sixth building had been built, the union workforce was turning out 60,000 appliances a week, and the complex was powering the explosion of the U.S. consumer economy.
The arc that followed is familiar. Employment kept rising through the ’60s, but it peaked at 23,000 in 1973, 20 years after the facility first opened. By 1984, Appliance Park had fewer employees than it did in 1955. In the midst of labor battles in the early ’90s, GE’s iconic CEO, Jack Welch, suggested that it would be shuttered by 2003. GE’s current CEO, Jeffrey Immelt, tried to sell the entire appliance business, including Appliance Park, in 2008, but as the economy nosed over, no one would take it. In 2011, the number of time-card employees—the people who make the appliances—bottomed out at 1,863. By then, Appliance Park had been in decline for twice as long as it had been rising.