Insourcing boom? Not so much

Publications in the popular press have noticed that some manufacturers are bringing work back to the U.S. from China and are excited about the implications. But seasoned observers of U.S. foreign trade warn that much of the cheering is misplaced; long-term implications are still worrisome.

That is the lesson you can draw from a recent exchange between writers at the Atlantic Monthly and Alan Tonelson, of the US Business & Industry Council. The Atlantic writers gave Tonelson space to respond to their articles online. In contrast to the upbeat statistics they quote, Tonelson says

"...neither (writer) gives their readers the most important information they need to know about domestic industry's current circumstances and future prospects - that virtually no national- or global-level data show that American manufacturing is even continuing its recovery from recession, much less stealing the march on Chinese and other foreign rivals. Indeed, nearly all of the most comprehensive statistics portray U.S. industry as still slipping further down the international ranks."

The Atlantic writers' main gripe with Tonelson's response is that he uses data from a year or so ago. Explains one Atlantic writer, James Fallows, "....people close to the factory-floor realities in both the United States and China told me that changes beginning to be visible now seemed likely to alter those pressures. I wrote the story because people whose track record and judgment about technological trends I have learned to trust, over the years, told me these changes were worth noticing. Since they were talking about shifts that are just getting underway, the early trends they were talking about would not be captured in past manufacturing statistics, even those from 2011."

Well, perhaps, but manufacturing trends in place for less than a year could also be a mere blip on the radar screen, not signs of long-term changes in competitiveness.

You can read the original Atlantic Monthly articles here:

http://www.theatlantic.com/magazine/archive/2012/12/the-insourcing-boom/309166/

http://www.theatlantic.com/magazine/archive/2012/12/mr-china-comes-to-america/309160/

Tonelson's reply is here: http://www.theatlantic.com/business/archive/2012/12/alan-tonelson-the-insourcing-boom-that-isnt/266261/

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