Refreshing article that I came across today.

Made in the U.S.A. Published: September 9, 2010 Caterpillar will break ground on a 600,000-square-foot facility in Victoria, TX, where it will manufacturer hydraulic excavators. The plant, which will be operational by 2012, will produce two excavator models currently made in Akashi, Japan, and exported to the United States. The announcement by the maker of construction equipment was quickly followed by a statement from John Engler, president and CEO of the National Association of Manufacturers (NAM), praising Caterpillar for creating new jobs in Texas and contributing to the U.S. economy. Indeed, it is nice to see American manufacturers coming home again. But is the U-turn away from outsourcing and back to the U.S. for Caterpillar — and other domestic manufacturers — some sort of altruistic allegiance to our homeland, or simply a sound business move? “Both,” is probably the right answer. But c’mon, business is business. Caterpillar and many other manufacturers are building factories on U.S. soil again to exploit the supply chain and distribution advantages of being closer to the customers they serve. Caterpillar, for example, is in no way abandoning its presence in Japan. On the contrary, the company is now dedicating the Akashi facility to serving the growing demand for excavators in Asia. Caterpillar also plans to quadruple capacity at its excavator plant in Xuzhou, China, to support the Chinese market, the company said. What’s really at work here is a need to take back control. In the 1980s, when outsourcing took hold as a cost-saving business strategy, many manufacturers jumped on the bandwagon and looked overseas for suppliers. Some of these same companies are now realizing that low-cost labor is not enough to offset the consequences of poor quality components, high transportation costs, inflexible supply chains, and the risk of compromising intellectual property. A recent story in the Minneapolis Star Tribune highlights the trend of onshoring, or bringing manufacturing back in-house. The story includes examples of a number of companies, from General Motors to Oracle, that are “rediscovering the advantages of vertical integration, controlling more steps in the process of sourcing, making, and distributing their products.” Here’s the best quote in the article (in my opinion), an indictment of overzealous outsourcers: “It was a goofy, sophomoric idea,” said Fred Zimmerman, a retired business professor at the University of St. Thomas, of the wholesale move by companies to outsource functions. “It was based on the principle that it was always cheaper to do things overseas. But the ease of outsourcing — both internationally and domestically — was overestimated.” I like how Zimmerman boils it down to the basics. To me, that means: Nothing is ever as simple as it seems, and nothing stays the same. (In other words, stop being a lemming and jumping off the cliff just because your competitor did — that’s so “goofy and sophomoric.”) What U.S. manufacturing needs more than anything is strong leaders, including companies like Caterpillar that see the big picture. And that big picture should always include some products that are made in the good ole’ U.S. of A.