The Insourcing Boom from The Atlantic tells the renaissance story of General Electric’s Appliance Park manufacturing facility in Louisville.
When a company outsources all of its manufacturing, more is lost than just jobs:
But a problem soon became apparent. GE hadn’t made a water heater in the United States in decades. In all the recent years the company had been tucking water heaters into American garages and basements, it had lost track of how to actually make them.
In the rush to lower costs by moving manufacturing offshore, we’ve also lost some of our collective knowhow. However, that doesn’t mean we can’t get it back:
So a funny thing happened to the GeoSpring on the way from the cheap Chinese factory to the expensive Kentucky factory: The material cost went down. The labor required to make it went down. The quality went up. Even the energy efficiency went up.
GE wasn’t just able to hold the retail sticker to the “China price.” It beat that price by nearly 20 percent. The China-made GeoSpring retailed for $1,599. The Louisville-made GeoSpring retails for $1,299.