Hitting The Mark

The Benefits of Insourcing in 2013: Cost Savings & Savvy PR

Following years of moving jobs overseas, many American companies are choosing to bring manufacturing operations back home. This is proving to be an effective strategy from both a financial and a branding perspective, cutting costs while garnering positive public relations. Many consumers have long preferred products that were made in the USA, and highlighting this now favorable attribute is an opportunity for marketers to differentiate their brands at a time when attitudes are changing.

After a tradition of overseas production, General Electric is reacting to the outsourcing backlash by moving much of its appliance-manufacturing operations back to the U.S., and many other companies are making similar changes to their business models, such as General Motors, which brought back ninety percent of its IT jobs last fall.

Outsourcing, says Jeffrey Immelt of GE, is quickly becoming “outdated as a business model for GE Appliances.”

There are many reasons this makes financial sense for companies in the context of the global economy, as Charles Fishman recently outlined in The Atlantic:

  • Oil prices are three times what they were in 2000, making cargo-ship fuel much more expensive now than it was then.
  • The natural-gas boom in the U.S. has dramatically lowered the cost for running something as energy-intensive as a factory here at home. (Natural gas now costs four times as much in Asia as it does in the U.S.)
  • In dollars, wages in China are some five times what they were in 2000—and they are expected to keep rising 18 percent a year.
  • U.S. labor productivity has continued its long march upward, meaning that labor costs have become a smaller and smaller proportion of the total cost of finished goods. You simply can’t save much money chasing wages anymore.

Today’s American consumer values the company that contributes to rebuilding our own economy here at home, making this a solid marketing opportunity across a wide range of industries. We look forward to watching the insourcing movement continue through 2013 as more companies adapt to the changing global economy and if they're savvy, capitalize on the PR and marketing advantages that go along with it.