Manufacturing Shifts Back to Industrialized Countries

RFID technology can play a role in keeping domestic production competitive.
Published: August 29, 2013

We’re coming up on Labor Day weekend here in the United States, and the news for U.S workers, as well as those in other industrialized countries, could be good. It appears employment opportunities are improving—albeit slowly. Signs indicate that a growing number of companies are moving their manufacturing operations back to the United States and Europe, rather than producing goods in low-wage countries.

Recently, Google introduced the Moto X, the first cell phone produced since Google acquired Motorola Mobility (see What Google’s Purchase of Motorola Mobility Means for NFC), the cell phone manufacturer created when Motorola was split into two separate companies (the other company, Motorola Solutions, manufacturers RFID readers, among other devices for businesses. When Google announced the Moto X, it reported that the phone would be manufactured in Texas. And last year, Apple announced that it would make some of its McIntosh computers in the United States.

So what is fueling this shift back to domestic production? For one thing, costs in China are rising, and the advantage of producing goods there is not as great as it once was. A recent study conducted by research firm IHS iSuppli found that the cost of producing an Android phone in the United States is only $4 more than it costs to make the same model in China.

Another reason for moving production back to the United States is that it enables a company to react more quickly to changes in demand. Longer supply chains make it more difficult to increase production when demand is high.

RFID technology can certainly play a role in helping keep the cost of domestic production low. By tracking work-in-process and automating tasks, businesses can produced more goods with fewer workers. NXP Semiconductors and Motorola have released a white paper titled “Gaining efficiencies and reducing cost in a competitive environment.” The document highlights how manufacturers, distributors and retailers can benefit from using the technology.

“RFID brings a broad range of benefits to the manufacturing process including: enabling of process automation, providing better visibility into manufacturing flow, supporting more efficient operations, increasing security, delivering greater accuracy, and providing added value, all of which give rise to superior productivity at reduced capital and labor costs while increasing revenue,” the white paper states. “Forward-thinking manufacturers not only benefit internally from inclusion of RFID, but also set themselves apart from competitors by offering an innovation that clients down the supply chain can use to their advantage.”

There is a lot of truth to this statement. Major changes are ahead for the industry, as vision technologies, RFID, robotics and other advances enable cheaper manufacturing in industrialized countries. This will bring challenges for business (as well as for the low-wage countries that lose manufacturing jobs). This white paper addresses some of the issues that RFID can address. I encourage you to download it.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark’s opinions, visit the RFID Journal Blog, the Editor’s Note archive or RFID Connect.