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U.S. factory work is returning, but the industry has changed

BY ALANA SEMUELS Published: March 17, 2013

The company still will make 90 percent of its goods in overseas factories.

“We don't envision the entire industry going back to the United States — low-cost Asian manufacturing will still be the base for volume,” said Jonathan Simon, the CEO of 1888 Mills. “But for just-in-time service, U.S. manufacturing does make sense.”

In North Carolina ...

About 400 miles away, in North Carolina, computer giant Lenovo is doing the same thing. In October, the company announced plans to open a manufacturing plant in North Carolina to make specialty personal computers for the U.S. market. The initiative will create 115 jobs, 15 of which are engineering positions. But the company also is expanding research centers in Japan and China.

“It's a relatively small-volume facility. It's not going to produce millions of units,” said Mark Stanton, Lenovo's director of supply chain communications.

The United States lost 6.3 million manufacturing jobs between January 1990 and the industry's low point in January 2010, a 36 percent decline, according to the Bureau of Labor Statistics. Since that low point, the industry has added nearly 500,000 jobs, an impressive number, but one that barely begins to offset the millions of losses.

A walk through the spacious 1888 factory in Griffin shows why job gains have been slow, despite some onshoring. Machines spin threads of cotton into yarn, a process once done by hand; they weave the yarn into thick rolls of fabric, cut the fabric into towels and sew the hems.

Where a whole factory was once needed to bleach and color the towels, a Rube Goldberg-like machine does that work with minimal labor; another machine dries the towels.

“It's all automated,” Douglas Tingle, founder of 1888 Mills, said on a tour of the factory. “Some of this is the latest technology advancements.”

That automation is part of the reason that although labor costs are higher in the United States than in other countries, it can make sense to make towels and other products here. But there are other reasons, as well. If 1888 needs to make changes to towels, it can get the finished product to Walmart more quickly from Griffin than it could from China. The rising price of oil is increasing shipping costs, and again could provide some cost savings for locally manufactured products.

“One of the things you might see if production coming back here, but not with as many jobs as used to be the case,” said Jared Bernstein, a senior fellow for the Center on Budget and Policy Priorities and former chief economist for Vice President Joe Biden.

MCT Information Services

People talk about manufacturing being a big source of job growth. It's going to grow, but it's not going to be a big source of total employment. It's just a drop in the bucket.”

Tom Runiewicz,
Principal for the industry practices group at IHS Global Insight


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