Why Does Manufacturing at Home Really Matter?

In an election year, candidates from both sides will generally declare that we need more domestic manufacturing, and they promise to make it happen.

Different sides will propose different ways to accomplish it. Republicans will call for lower tax rates and lighter regulations; Democrats will call for open borders and higher punitive tariffs. Each side hates the other’s methods; nothing gets done.

Does this really matter?

There are economists, investment advisors, even politicians out there, who will say it doesn’t matter.  They will say we need business, of course; but as long as there are transactions happening, that’s economic growth. They don’t think we need to delve deeper.

But we do—let’s delve.

Outsourcing

A manufacturer employs a host of people to develop and market products; purchase and process raw materials or components; assemble buildable elements into a finished good; and package it all up for shipping and delivery.

There has been no collaborative decision between manufacturers to outsource any of those steps; these decisions are made business by business, product line by product line, and even component by component.

Consider an appliance manufacturer that used to injection-mold its own housings and dials, assemble its own motors and pumps, wrap its own power cable, program its own control panels, and assemble the finished product, ready to sell.

Over the decades, as cost pressures increased, the company started outsourcing the motors and cable to China; the control panels to Japan; the cable, housings, and dials to Mexico.  Before you knew it, this American factory was simply assembling components imported from abroad; lots of domestic jobs disappeared.

But the jobs that did remain were the better-paying ones, weren’t they?  We still have the engineering department here to design it. The buyers are still here, as are the sales and marketing teams and the logistics staff at the warehouse, and we still retained some assembly line functions—after all, the people on the line who assembled all these foreign-made parts together for a finished product still had jobs.

Until they are replaced by robotics, anyway.

We only outsourced the low-paying jobs, the boring injection-molding and things like that, we were told.  We kept the high paying, middle-class jobs here.  And the lion’s share of the profit will come here, after all, since the product was designed here.

That’s the case that the advocates of the status quo will trumpet. We’re only outsourcing the low-paying assembly line jobs—no big deal, because the good jobs remain here.

Until that is, the manufacturer is taught the final lesson.  By enabling another country to do a lion’s share of the work, the foreign producer eventually recognizes the American company is an unnecessary part of the equation; after all, the latter isn’t doing anything but buying a cheap import and reselling it at a markup.  Too little too late, the American company discovers that all it has done has been to train its future replacement on the American market.

The Mobility of Domestic Manufacturing

The fact is most of us, on all sides, have always looked at manufacturing all wrong.

There aren’t just molding jobs and assembly jobs and accounting jobs and engineering jobs, and so forth.

In every company, each of these areas has its own levels of accomplishment.  Just as there are A/R and A/P clerks reporting up to the accounting manager, who then reports up to the CFO, assemblers report up to a foreman, who then reports to a plant manager.  A factory employs tool and die makers, quality engineers, master craftsmen trained in wood, plastic, and steel, a powder coat line, a quality department, and each area has a foreman or line supervisor, reporting up to a production director.

Every department, from engineering to accounting, from purchasing to production, takes minimum-wage entry-level employees and provides them with a path: either to rise in that discipline, or to move laterally across the organization, until they find a specialty in which they’ll excel.

Like the quintessential “mail room” saying: “You gotta start somewhere.”

A huge number of people have found their way to their eventual careers by starting on the assembly line and moving into quality and then engineering; or moving from assembly into purchasing and then logistics; or starting on the line, jumping around from department to department—and learning them all–and eventually rising to CEO because that broad knowledge base makes them a great fit for understanding every working part of the business.

It is therefore completely wrong to think of the light assembly line, the plastics or castings line, the CNC or machining line, as being the dead-end blue collar jobs that the establishment often considers them to be, so unimportant and “non-essential” that shipping them overseas is… no big deal.

In fact, these blue collar positions are the launching pads for careers.  These are the points at which future entrepreneurs master a skill, where future executives start on the career ladder, and where the hard-working poor get their first opportunity to escape the circumstances of their birth, and start pursuing the American dream.

The obvious corollary is undeniable. Every company that outsources parts, components, subassemblies, or finished products to a foreign country—whether to mainland China or elsewhere (though yes, it’s usually China)—is thereby snuffing out these opportunities.  Not just those unexciting assembly line positions, but the entire career paths that might have begun with those entry level posts.

A Path Forward

Ever since the 17th Amendment gave birth to the modern regulatory state, Americans have increasingly turned to our politicians for solutions to our problems.

Certainly, we need to recognize the candidates who will support a manufacturing renaissance, through advocacy of tax cuts and regulatory reform, higher tariffs, and even bans on imports from enemy nations.

But we can’t keep waiting for a political solution. Our Founding Fathers would never have wanted us to demand that the federal government force us to do the right thing. We also need to demand a change in the private sector.

As purchasing and engineering managers, as supply chain and finance department executives, we need to stop waiting for government action.  We need to seek out every opportunity to bring every level of manufacturing back home, company by company, part by part.

And also, as individuals, with our 401Ks and our IRAs, we need to put our money where our mouth is, and have that hard conversation with the investment analysts who manage our savings: Stop judging investments based on poppycock like DEI and ESG; start seeing the value in companies that make or source more and more of their parts here.  Let’s start investing—not in the companies that flee these shores, but in the companies that return from abroad.

That’s what it will take to revive not just the American economy, but our culture—our future—the American Dream.

John F. Di Leo is a Chicagoland-based international transportation manager, trade compliance trainer and speaker. A one-time Milwaukee County Republican Party chairman, he has been writing a regular column for Illinois Review since 2009. Read his book on vote fraud (The Tales of Little Pavel) and his political satires on the current administration (Evening Soup with Basement Joe, Volumes I and II, and the brand new Volume Three).