Outsourcing manufacturing overseas is standard operating procedure for the majority of American companies because they believe it saves money and increases profitability. While in the short term outsourcing may give companies a competitive advantage, Bluelefant believes that in the long term local production is better for everyone concerned.
It’s a time-honored truth that manufacturing builds middle classes. Every country we outsource to eventually builds their own middle class. When the cost of doing business becomes ‘too high’ due to the inevitable rise of wages and labor costs, we outsource to a different country. First Mexico, then China, now southeast Asia, the Indian subcontinent, South America, Eastern Europe and Africa. Eventually this trend should create enough middle classes that there will be nowhere left to outsource too. Then what?
At the same time, outsourcing of jobs leads to lower wages, higher unemployment and a shrunken middle class at home which has less disposable income to spend on the products and services businesses provide. When companies see their revenue decline they will implement more cost-cutting measures to maintain their profit margins, further exacerbating the problem. Business leaders are too often driven by the lure of short-term gains and fail to see the bigger picture. The ever-widening gap between the top and bottom is only the first stage. With an eroding consumer base, it’s only a matter of time before the top will collapse. A business climate that undercuts its customer base will ultimately fail.
While it’s possible to successfully operate certain businesses, like craft breweries, on a local or regional scale, apparel brands still must appeal to and reach the national market but can still operate with distributed local production. The first company to develop a sustainable, local production model will be well positioned not only for long-term success but should also be a dominant player in their industry going forward. That’s why Bluelefant is committed to creating and supporting local manufacturing jobs and educating consumers on the benefits of products Made in the USA.