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Companies buck the outsourcing trend

Outsourcing may be cost-effective, but it has its disadvantages, as a few American companies that are reversing the trend have found out. NBC's Anne Thompson reports.

Workers at the New Balance factory in this suburb of Boston create the sound of "made in the USA." The company, striving in a world dominated by Nike, Adidas and Reebok, keeps 25 percent of its manufacturing in America — the only company to make any athletic shoes here.

"Our labor costs are 10 to 12 times higher," says President and Chief Operating Officer Jim Tompkins. "But productivity at New Balance's five U.S. plants is much greater, lowering other costs. We're able to deliver into the market in a matter of days, where our competitors are looking at a matter of weeks and sometimes months."

To speed up production, employees assemble in teams, designed to maximize output and minimize waste.

"Not so long ago, we used to make a case of shoes, 12 pairs, in eight days," says Lawrence, Mass., plant manager Claudio Gelman. "Now we're down to three hours."

Other companies are actually bringing jobs back to the U.S. One is Long Island's North Fork Bank. Even though its customer service call center in India was a bargain, there were problems.

"That amounted to a savings of about $20,000 a head," says North Fork President, CEO and Chairman John Kanas.

Customers complained workers didn't know Southampton from Westhampton.  And North Fork's reputation as a neighborhood bank suffered.

So Kanas brought the jobs back to Long Island, adding $2 million a year to his expenses.

"We've kept it here because of the tremendous importance of quality of that experience to us," he says. "And we think the tradeoff for the money is worth it."

Unlike other carriers, Denver-based Frontier Airlines keeps all its work in-house, refusing to outsource its maintenance or its call centers to other companies in America or overseas.

"Our employees here take ownership," says Frontier CEO Jeff Potter. "They are so committed to our customers, and I'm not sure that's something you could find offshore."

New Balance, Frontier and North Fork Bank have all discovered that while it is more expensive to keep work in this country, it ultimately delivers a bigger payoff.

So much so that New Balance plans to expand its U.S. manufacturing, believing that "made in America" still has a competitive edge.