Does Re-Shoring Mean a Return to Industrialized America?

I really like the article Kevin O'Marah wrote over at SCM World entitled: Re-shoring is a Red Herring.  He rightfully points out that while re-shoring is great for a variety of reasons we should not hold out hope for the whole scale re-industrialization along with the many jobs it brings.  The days of just graduating high school and going to work at the local plant are over even if manufacturing returns.

One of the reasons this is true was described in a Logistics viewpoints' prediction for 2013 where Adrian Gonzales identified "the robots keep coming". Also, back in February I wrote  a post titled: "Robots and Other Supply Chain Trends" about an interaction Kevin and I  had about the idea of robotics and how robotics is a key factor of what will allow re-shoring while not employing a lot of people.

Bottom line: Re-shoring is great for America, great for supply chains and great for the consumer (Lower cost, higher flexibility) but is not the dream people are making it appear relative to jobs and the middle class economy.

Robots and Other Supply Chain Trends - Kevin O'Marah

Believe it or not there is a Kevin O'Marah out there (yes, he spells his name differently than I do) and he is in the supply chain field.  Actually, a very accomplished person in this field.  I have been in a few meetings with him and it is fun to see who the moderator really means to call on (hint: it is usually him).

I write this because I wrote a piece over the weekend entitled "A Drone Delivers Your Package". The article discusses how the use of drones may come to package delivery.  Kevin retweeted this and made a reference to an article he wrote just last week about 5 big supply chain trends.  One of these trends was "Robotics takes off".  While he does not reference drones he clearly articulates, rightfully so, that robotics will take off in the logistics field and the trade off of capital versus labor is starting to favor capital in a big way.

Robots, like the drones I mentioned, are becoming incredibly cheaper at the same time they are also becoming more dexterous and mobile.  Here are the 5 predictions:

1. Amazon stumbles - A bold but insightful prediction and one which is not so much predicated on them failing but on the brick and mortar guys learning to compete very quickly. 
2. Africa Becomes Your Most Important Growth Partner -  It is essentially the "final frontier".
3. The Carbon Tax Happens -  I could not agree more.  A tax, cap and trade or whatever form it takes, we will soon pay for destroying the environment. 
4. Robotics Takes Off - Enough said.
5. CSCO becomes the CEO - While this has already happened the rise of logistics and supply chain as the core differentiator makes those who hold this important position more likely to take over the company (see my article: Logistics Eats Strategy for Lunch).

So, we agree... Great predictions here and they are refreshing because they are bold and not the same old thing just warmed over.  Kevin is someone I have followed from back in his AMR days and I highly encourage you all to do the same.  You can read his writings at his blog: Beyond Supply Chain. 

Kevin's tweet is below:

"RT @logisticsexpert drones and robots in supply chain!!: dld.bz/cd2hg -see 5 predicts tinyurl.com/b2ld7z3
— Kevin O'Marah (@komarah) February 4, 2013"

As a side note this is also why people are guarded about all the optimism on the return of manufacturing to the United States.  One has to ask if it is because labor is getting expensive in China relative to labor in the US (when accounting for transportation costs) or is it because robotics have become so good and cheap that you reshore manufacturing in the US to save logistics costs AND you do not employ many people due to automation.

Paul Krugman is even weighing in on this.