Report: Outsourcing Not To Blame For Manufacturing Shrinkage

Feb. 15, 2005

When people talk about a perceived decline in U.S. manufacturing, outsourcing often gets the blame. However, a report from the Manufacturers Alliance/MAPI challenges that notion. Outsourcing, offshoring and corporate restructuring are not the primary cause of a shrinking U.S. manufacturing base, says the Arlington, Va.-based business and public policy research group. The decline in the number of U.S. manufacturing plants is a result of fewer business openings in the U.S. rather than of jobs being moved abroad, says Daniel J. Meckstroth, the alliance's chief economist.

The report notes that from 1999 through 2002, U.S.-based multinationals opened 246 facilities in foreign countries while the number of manufacturing plants in the U.S. declined by 20,000. "It is clearly not a case where large multinational companies are simply closing up shop in the U.S., displacing workers and moving abroad," Meckstroth states. "The shrinking number of manufacturing plants has come not from a spike in the rate of business closings, but rather from a decline in the rate of business openings. The rate of manufacturing plant closings has been relatively stable over a longer period of time," says Meckstroth.

Why are fewer factories being opened? Some blame goes to excess capital investment and a surge of mergers and acquisitions during the 1990s, both of which created excess capacity. The same applies with rising imports of manufactured goods. But Meckstroth also notes, "Lean manufacturing practices, Six Sigma programs to boost productivity and just-in-time inventory management all reduce the need for total numbers of plants and employees."

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.

      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).

      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.

      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”

      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.

      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.