Reporting Derrick Blakley
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AURORA, Ill. (CBS) – Over the last decade, the American manufacturing industry has lost 6 million jobs, many of them to China.
American companies have been outsourcing the work, because they can get it done more cheaply abroad. But CBS 2′s Derrick Blakley has found that the tide could be turning; some of those jobs are coming back.
The trend is still a trickle, not a flood, but corporations are starting to move jobs from China to the United States – major corporations like Ford, Caterpillar, NCR, and Otis Elevator.
On Tuesday, CBS 2 visited a suburban company that’s made the very same move.
For four years, Joe Dolak couldn’t find work in die casting, because so much work had gone overseas.
But Dolak recently got a call from Aurora-based Peerless Industries with a job offer.
“I thought it was a prank. I actually thought somebody was pulling a prank on me, because I couldn’t believe that someone was looking for me to go back into die casting,” he said.
Peerless makes audio/visual mounting equipment. They called Dolak, because they decided to move their die casting work from China to Aurora.
“They’re starting to see the costs going up in China on Labor; and looking at the freight and all the other costs associated with doing business in China. It’s becoming more and more attractive to bring work back to the United States,” Peerless CEO Michael Campagna said.
Labor costs in many Chinese factories have risen more than 50 percent this year alone. It’s part of a continuing trend, as Chinese workers demand more middle-class goods.
The wage advantage that lured U.S companies to China remains, but it’s rapidly shrinking.
“Until the labor costs are equal, we have to be innovative in ways to eliminate labor from the products,” Campagna said. “You can do that by investing in technology and equipment that will do a lot of the work that takes the human factor out of it as much as possible.”
Campagna pointed to high-tech machinery, like a highly-precise laser-cutter used by Peerless. And in the die-casting operation, employees are cross-trained so that fewer workers can do multiple jobs.
Joe Dallio, a fabrication manager, was hired as part of the Peerless expansion.
“My last job, I was closing facilities, because it was going the other way. So, to come over here and bring the work back in and bring people on board, it’s a better experience,” he said.
Peerless found other problems with manufacturing in china, too. Quality wasn’t always up to par and it took four to six months to change a product.
Also, fake versions of their products were being made and sold all over the world.
Those are the kinds of problems other American manufacturers were willing to put up with, as long as that huge wage advantage was in place.
Now that it has diminished, many companies are having second thoughts.