By Larry Dignan
Posting in Technology
Could there be a nascent movement to bring manufacturing back to the U.S.? The Wall Street Journal has the tale of Farouk Shami, who runs a $1 billion...
Could there be a nascent movement to bring manufacturing back to the U.S.?
The Wall Street Journal has the tale of Farouk Shami, who runs a $1 billion manufacturing company that makes hair irons.
After spending $500,000 a month chasing counterfeiters around China, Shami decided to take his manufacturing back to the U.S. Farouk Systems Inc. now makes its wares in Houston after ditching its China manufacturing and distribution hub.
Shami reckons that moving production back to the U.S. will help him control quality, inventory and counterfeits. Why? Any hair iron not made in the U.S. will now be suspect.
Here's to hoping that Shami can overcome a few math problems. Among the key numbers in the Journal story:
- $2.50: Extra cost per iron manufactured in Houston relative to China.
- 60%: Percentage of Farouk Systems' sales from the U.S.
- 1,200 workers: Folks Shami is looking to hire by December.
It remains to be seen whether Shami's bet pays off---ultimately the earnings will tell the tale---but it's nice to see some thought given to U.S. manufacturing.
While Shami's story is notable keep in mind that the world is still a big place and manufacturing plants are likely to move everywhere. Shami is coming home to the U.S. China has outsourced jobs to the U.S. Meanwhile, companies are moving offshore too. What shore companies choose will come down to the dollars. Check out BNet's library to work through the details.
Aug 24, 2009
There are tradeoffs and sometimes the economies favor higher cost of goods versus losses to counterfeiting, especially if your market is 60% US. I wonder how many other small industries might find better protections with onshore US manufacturing along with possibly favorable deals relative to tax, lease and labor in such places as the Rust Belt.