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For Small Biz, Made in the U.S.A. Making a Comeback

Brian Shactman|Reporter, CNBC.com
Thursday, 17 Nov 2011 | 9:15 AM ET
Home Brewed MFG
The challenge of finding qualified workers is the subject of today's new industrial revolution report, with CNBC's Brian Shactman.

There seems to be an emerging theme among American small businesses: "Made in the USA" is back.

Take Paul Fichter's Seattle-based business of making taphandles for major brewers like MillerCoors and AB Inbev.

Initially, when the company began back in 1999, his orders were filled in China.

"From the very start, China was part of the business plan because of low labor costs," Fichter told CNBC. "I could start manufacturing without a capital investment.

"I could send orders there without having to build one myself."

As the business grew, Fichter opened his own factory in China, but in recent years, the dynamic has changed.

"Between 2006 and now, our labor cost rates have gone up three hundred percent," he said. "Fuel costs have gone up, so shipping has become more expensive. And the ships go slower, so my lead time went up."

According to KPMG International, China is losing its stronghold as a superpower with the lowest-cost manufacturing. Labor and shipping are cited as reasons, along with an aging work force.

So, Fichter decided to pull out of China and build a 41,000 square foot manufacturing facility in Woodinville, Washington.

"With labor costs coming up in China and the cost of automation in the United States coming down, the balance of cost has changed in favor of the United States in certain items," said Fichter.

China isn't exactly going away in terms of its immense capacity to make low-cost products, but Fichter feels good about his decision.

"I definitely want to do it in the United States," he said. "Surprisingly, a lot of the things that we are looking at making are actually cheaper to make here in the United States."

Find Brian on Twitter: @bshactman



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