Bringing Back "Made in America"

October 4, 2012 03:04 PM

The world’s largest corporations keep getting more, well, worldly.

A look at the annual Fortune 500 list of global companies shows the U.S. still dominates the list, with 133 companies, but that number has dropped from 185 just a decade ago. China marches forward with more than 60 companies on the list, compared with 12 in 2001. Even developing countries, such as Brazil, India and Russia, are ramping up manufacturing due to the demand for western-style goods.

That got me thinking about U.S. ag manufacturing. Are we still producing the bulk of ag products (machinery, food, inputs, etc.) within U.S. borders? My research shows the answer is yes … sort of. Consolidation is rocking ag manufacturing just as it has crop and livestock production. The U.S. ag machinery industry includes about 1,100 companies, but the 50 largest companies generate more than 80% of the revenue. More equipment companies are moving manufacturing to the U.S., citing closeness to market. AGCO just unveiled a new tractor assembly plant in Minnesota that will eventually produce 18 models that had previously been built in France.

One bright spot is food manufacturing. Hershey, Kellogg, Campbell Soup and Hormel are in the top tier, with revenues of more than $6 billion each. Meanwhile, U.S.-based DuPont and Monsanto are leading producers of pesticide, seeds and other farming products. Archer Daniels Midland and Cargill, both based in the Midwest, lead the grain processing sector. Ironically, one of the top overall U.S. manufacturers deals in ag waste: Darling International, with sales of $1.8 billion and 3,300 employees, has more than 130 locations in 42 states. The Irving, Texas, company recycles beef, pork and poultry waste.

Reshore Our Work. It seems America still leads in dirty work, but there is more that could be done to bring back manufac-turing. There is a new business buzzword, "reshoring," which means bringing back work, parts or tools that will end up being used in North America. Too often, manufacturers decide to offshore manufacturing because the freight-on-board costs are lower for work done overseas. Reshoring, however, factors in the costs of regulatory compliance, intellectual property loss, travel to overseas vendors, the potential for quality loss, foreign wage inflation and the need to carry extra inventory as a cushion against late or damaged shipments. Count all that together, and often an economic case can be made to reshore that work in the U.S.

America used to be known for making and selling products all over the world stamped with three proud words: "Made in America." We need to bring that work—and pride—back. The push for reshoring is an encouraging development.

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