$32M bet: Overseas jobs returning to Silicon Valley?

February 14, 2013 6:43:34 PM PST
A homecoming of sorts is happening in Silicon Valley as jobs that moved to China in recent years are coming back to the United States. Re-shoring is creating a lot of opportunities right now.

If you remember the movie "Field of Dreams," you'll recall the line, "If you build it, they will come." That's exactly what Flextronics has done -- build a new multimillion-dollar facility to help Silicon Valley companies as they bring manufacturing back to the U.S.

With 200,000 employees and facilities in 30 countries, Flextronics started detecting a year ago some of its customers wanted to bring production back to the U.S. So, it just invested $12 million and plans to spend $20 million more in new facilities to be ready when offshoring becomes re-shoring. One key reason is rising costs in China.

"As they move more towards a middle class, they're going to have escalating wage rates. And what you're seeing in the United States, at the same time, is you've not seen such much movement in wages at all, over the last four or five years. So, what's doing is that arbitrage of people, that labor arbitrage, is starting to dissipate," explained Flextronics CEO Mike McNamara.

This new product innovation line in Milpitas will allow Silicon Valley companies to take concepts from their research and development labs and turn them into prototypes using the latest 3D printing technology. Flextronics can also do advanced engineering and debugging and production as the customer desires.

"With this, we are going to have more jobs with more customers coming into our facility," Flextronics employee Alvin Mandin said, acknowledging that it makes him very proud to be part of that process. Flextronics has 2,500 Silicon Valley employees and 100 job openings. While it focuses on high-tech projects, the Valley is seeing non-tech companies re-shoring.

Calibowl is one example. A year ago, it moved production of its unique spill-proof plastic bowls from China to Union City. Sales have continued to grow and it's able to supply retailers in a few weeks instead of waiting for trans-Pacific shipments. Calibowl co-founder Richard Stump says re-shoring works. "It's a slow process because I think companies are so used to doing business in Asia, specifically, that they're not sure of the benefits they can get from re-shoring, but it's here to stay," he said.

American consumers will play a big role in the future of re-shoring. During the recession a lot of consumers became price conscious, so we'll have to see if "Made in America" will be a big selling point.


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