In his State of the Union address, President Barack Obama talked about the “insourcing” trend in the manufacturing sector. In recent months large companies like General Electric and Apple have announced plans to assemble products in the United States. Even Foxconn, the giant electronics assembler known for employing hundreds of thousands of workers in China, has announced that it is exploring building a U.S. plant.
While these announcements are encouraging and speak to the increased competitiveness of the U.S. economy, they still represent a small slice of manufacturing employment. And since manufacturing represents a small—and still shrinking—share of the U.S. economy, they represent an even smaller percentage of overall U.S. employment.
The real insourcing story may be in the service sector.
We run an online marketing company that helps small businesses use the Internet to drive sales and profits. We work with more than 1,000 companies, including dog groomers, pizza shops and law firms. To provide value for our customers, we not only need to invest in cutting-edge technology that enables our employees to manage hundreds of simultaneous marketing campaigns. We also need to understand the current and developing trends that affect how local merchants sell their goods and services and consumers buy from them.
That means we hire U.S. workers who work here in Rochester. Don’t get us wrong; workers in countries like India and the Philippines, those hired by others in our sector, are smart, hardworking and committed. And given the prevailing salaries in those countries, they are far less expensive to hire.
But these workers just don’t know how sports fans order takeout during the NFL playoffs—important knowledge to help a local pizza shop take advantage of these games to improve sales. Someone who lives far away doesn’t grasp what customers are looking for when they seek out a yoga studio or personal trainer or any number of services that, if not unique to the U.S., certainly have particular nuances that are helpful to understand when promoting them to potential customers.
All of this means our U.S. employees, if more expensive to hire and train than those in India, deliver superior results and therefore cost us the same as, if not less than, non-U.S. workers. These lower costs are not easy to measure. It might not even be possible to do so, since our employees’ higher productivity is not a function of more calls answered per hour or more keyboards strokes in a shift.
What our employees bring to the job is cultural capital, a lived knowledge of the buying habits of people like them. That is acquired only by taking part in the daily commercial interactions with local merchants that make up a large part of life in any society.
Tapping into the cultural capital of our employees works. Since 2010, our company has grown by 75 percent a year. We’re now up to 49 employees, all but three of whom work here in Rochester. We just hired nine more salespeople to accelerate growth in 2014. And we’re solidly profitable.
Globalization, with its supply chains and employee interactions spanning political and social borders, is an amazing phenomenon. It accelerates the development and dissemination of ideas, goods and human talent. It binds diverse peoples in a common quest for a better way of life and for the social and political stability that enables it.
But the blunt fact is that the overwhelming majority of business transactions are still very local, undertaken by small firms that operate in very particular environments, by people who understand them well. Those are the businesses—in our case, American—with which our company works.
And that’s the reason U.S. workers work for us.
Chad Hill and Adam Stetzer are co-founders of HubShout.
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