Michael O’Shaughnessy, president and owner of Element Electronics, recently announced that his company is teaming with Lotus International, a manufacturing company in Canton, Michigan. Element plans to hire 100 workers, and will also open a call center in Michigan to field customer questions.
Last year, the Boston Consulting Group predicted that in the next five years more companies will shift manufacturing work back to the States, or choose to locate new production in the U.S. because of China’s shrinking cost advantage. This is known as re-shoring or on-shoring, a reversal of the offshoring trend which shipped so many jobs to Mexico, China, and other countries where labor costs are much lower than they are in the States.
The reason Chinese manufacturing is losing its competitive edge is two-fold. First, Chinese wages are rising at a rate of 15 percent to 20 percent a year. Second, it is becoming increasingly expensive to ship raw materials to China, and then ship finished goods back to the U.S. These two trends are making American workers’ wages much more attractive to manufacturers.
O’Shaughnessy made a special note in his announcement, saying that only televisions 46 inches and larger will be manufactured in the new plant, which is scheduled to start production in March of this year.
