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NPR Planet Money Correspondent Adam Davidson tackled the issue of manufacturing in the United States by examining the history of manufacturing in one town-Greenvile County, South Carolina. Greenvile used to be a textile manufacturing town where communities were defined by what factory you worked for. The jobs were great for people with little education. It was common for people to drop out of high school in order to start work. Manufacturing jobs in the United States was always a great option for people who might be unable or unwilling to go to college and get a law or business degree. Manufacturing gave a certain sect of the American population a chance at the American Dream. Over the years, as textile manufacturing jobs continued to be outsourced overseas, the factories began to close.
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The main reason for offshore manufacturing is to reduce production costs for a manufacturer who is trying to make more profits by exploiting the comparative advantages that exist in other countries and which are not in his/her country.
In most cases companies are attracted to offshore manufacturing because of the tax breaks offered by the host. Also, some home countries do not levy taxes on profits made from overseas manufacturing as long as the profit does not come into the country. This is the other intoxicating factor that makes many companies to invest overseas so as to avoid this taxation.
The Washington Post reported that over the last 10 years the United States lost more than a quarter of its manufacturing jobs. Although we are all aware it’s cheaper to manufacture products overseas, Washington Post reporter Peter Whoriskey explains that Asia is producing an ever-increasing workforce armed with engineering doctorates. China and other Asian countries are also flowing millions of dollars into high tech research in order to compete with the tech industry in the United States. For example, over the last 10 years China doubled the number of engineering doctorates awarded.