CCES News For You

Feb. 7, 2010
One factor that has certainly hurt the US economy, as well as our careers as environmental and climate change professionals has been “outsourcing” or “offshoring”, the move of more manufacturing to faraway, developing nations with labor costs much lower than ours and with more lax environmental rules. The lost time and extra expense of shipping raw materials to and product from these countries to US and European consumers is more than made up by these savings. This trend, begun in the 1990’s, has cost the productive manufacturing jobs of hundreds of thousands of Americans. Plus, while lightening the load of in-house environmental engineers, this trend has not reduced emissions and may have increased it, just displacing it to other countries.

However, offshoring may have peaked and the reverse, called “backshoring”, beginning to gain momentum. Recently, a few companies have announced they would move manufacturing operations and jobs back to the US. For example, NCR is moving the manufacturing of ATMs from a plant in Brazil to Columbus, GA so that its designers and engineers in its nearby innovation center can more easily monitor operations and perform proper QA/QC. NCR also wanted a US location to be able to show products to potential customers as they are being manufactured. Recently, GE announced it would move some foreign operations to two newly built manufacturing plants in the US (NY, KY). This may not be a trend yet, but backshoring has opened the eyes of other CEOs.

While there are only a handful of examples, the logic behind backshoring, such as the rising cross ocean transportation costs and rising costs for wages and raw materials in Asia, are beginning to concern some US companies. In addition, there have been accusations of industrial espionage in certain countries, adding a significant expense to the critical protection of intellectual property.

At the same time, the US is “fighting back.” There is a growing number of states that are offering tax incentives or other services (such as finding the ideal location for the specific needs of the plant) to a company such that the difference with overseas is less stark. With reductions of real estate prices, some companies see the logic of purchasing and modernizing old US plants to meet their needs in the modern age. NCR’s new plant in GA will produce their most sophisticated products. It has been speculated that manufacturing of commodities, such as clothing and consumer electronics, may remain outside the US, while backshoring will prevail at the high end of the spectrum, such as in IT and telecommunications, that are quality-focused.

Where does that leave us environmental professionals? Let’s hope that logic prevails here, too, so that we can meet our environmental goals of low impacts in a commonsense, site-specific manner through intelligent, technical efforts with flexibility from the regulatory agencies so that these issues do not needlessly hold up potential backshoring projects. This will keep us busy, productive, and achieving noteworthy goals of more industry and jobs in the US, while protecting people’s health and environment.