Market Overview

Manufacturing Is Returning to the US, and FANUC Robotics is Helping to Facilitate the Process

It seems as though the perception for years in this country has been that manufacturing in the United States is a thing of the past.

During the 2008 election season, John McCain told a group of laid-off workers in Michigan that, quite simply, manufacturing jobs were not coming back, The Washington Post reported.

McCain ultimately lost Michigan in the Republican primaries. Some might argue that he was just speaking the truth, but perhaps he was flat out wrong.

The general consensus has been that it no longer makes any sense to produce goods in the United States. Why would a company bother to make its products in the U.S., when it can save so much money by producing overseas?

That line of thinking may have been true in previous decades, but it is no longer true going forward.

Broad economic trends are changing, and one local Michigan company is actively working to bring manufacturing back to North America.

FANUC Robotics is a company based in Rochester Hills, Michigan working to change people's perception of manufacturing in the United States.

FANUC is not just some small company with a vision: FANUC Robotics was founded in the 1970s, is the global leader in robotics, and has a presence on multiple continents.

In 2004, FANUC created an initiative known as "Save Your Factory." The goal of the initiative was to demonstrate to manufacturing companies how they could use robotics to reduce their overhead costs and keep their factories in the United States while remaining competitive in the global market.

Kevin Ostby, Vice President at FANUC Robotics, spoke to Benzinga about the initiative.

"The initiative is that you can reduce your piece-part cost and manufacture competitively in North America through the use of automation and robotics," Ostby stated.

Since the beginning of the initiative, however, things have changed.

"[When] it started in 2004, we called it 'Save Your Factory,' but it's really bringing manufacturing back on shore to North America," Ostby explained. "It's a two-way street: we're certainly promoting it to our customer base, but our customers are realizing it themselves. Companies like Caterpillar (NYSE: CAT) and Dow Chemical (NYSE: DOW) are basically recognizing that they can be competitive manufacturing goods locally."

No doubt automation is helping companies to be more competitive. Yet, there may be larger macroeconomic trends at work.

In May, The Boston Consulting Group released a report on American manufacturing. In the report, BCG predicted that manufacturing would return to the United States on a large scale within the next five years. Moreover, the report cited recent trends indicating that manufacturing was already returning.

Citing wage growth in China and the appreciation of the Chinese yuan, BCG predicts that by 2015 a company manufacturing in China will have the same overall costs as a company manufacturing in the United States.

Beyond macroeconomic trends, events within recent months have highlighted the increased risk manufacturing companies are under by spreading production chains across the globe.

The Japanese tsunami and the resulting nuclear meltdown have taken a major toll on manufacturing companies reliant on parts produced within Japan. Through "reshoring," companies can eliminate the risks posed by relying on production from different areas of the globe.

When manufacturing returns to the United States, will it face the same problems that may have driven it away?

In FANUC's opinion, no. When industrial robots were first introduced on a mass scale, organized labor largely opposed their use, citing a reduction in jobs. Since the economy has shifted and manufacturing has weakened, unions have changed their tune.

"It is dramatically different," Ostby said of the general situation. "Overall, organized labor has recognized that in order to retain manufacturing in North America, manufacturing has to be competitive. The way that it can be competitive is to do something more reliably, with a more quality output at a lower cost. The robot offers a great solution for that. At the same time, it allows that manufacturing operation to remain in North America, as opposed to it completely disappearing."

With a resurgence in American manufacturing, perhaps Michigan can finally look ahead to economic growth.

"I'm very positive about Michigan going forward," Ostby said.

Posted-In: FANUC RoboticsAnalyst Color Forex Global Economics Success Stories Tech Trading Ideas Best of Benzinga

 

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