I've chosen to do a separate post here simply because 200 words are inadequate to the task.
I am the owner of a small business - we just celebrated our 10th anniversary. Now much of what I have to relate here is anecdotal, so make of it what you will, but it is based on 10 years of practice and experience. My business is a small manufacturer of electronics for a niche branch of a major US industry. We're not part of the main and most visible sector, but we can see pretty well what they're doing there and have a lot of insider knowledge. I can't speak for the service or retail sectors as our products are strictly sold B2B.
1. Technology - High quality automation equipment is now within reach for small US businesses, and the inside scoop I'm hearing is that the "outsource boom" is ending. US businesses can't trust the quality or delivery times of Chinese factories, or risk the theft of intellectual property. These last few years the smarter companies have been investing in capital equipment here.
Most electronics assembly today consists of surface-mounted electronics. If you open your computer or cell phone and look closely at the parts, the lead wires of the parts do not go through the board, with the exception of some large capacitors or connectors. Look at a computer motherboard from 1993 and you'll see something different - lots of "through-hole" parts. Surface Mount Technology (SMT) was developed during the 1970's and 80's, but was cost-prohibitive for most until fairly recently. You need very precise and very fast robots to put these parts down, and these are large capital investments. In the 1990's a business of my size could not afford this kind of equipment. Now we can, but I only need to hire one very-skilled person to run the line, where in the 1990s I would have needed 6-8 people to populate boards. But that 1 person can produce in one day what my 6-8 people would have needed a week to build.
A startup with decent capital can set up an entire line for $200K to $500K. There are a number of US-based contract-manufacturers (job shops) that will do the work too if you want to hold on to your capital.
From a manufacturing standpoint, unless you're making a million pieces of something, you can absolutely stay local, and based on my conversations with our contractors, business is up big time. If you've got an idea for a product, you've got more tools than ever to bring it to fruition, if you know where to find them. And it is still a truism that America dreams for the entire world. The Chinese can build mass quantities on the cheap, but they don't design anything. American designers are still very powerful, and now the equipment is affordable enough to build it here, even when the wage gap is huge.
2. Worker Skill (and motivation) - Here's the bad news. Skilled and motivated workers are darn hard to find, but they actually always have been.
The problem is that due to our expanding welfare state, they're a lot less hungry now for work, and they've been weaned on self-esteem [nonsense] and "workplace diversity," and can lawyer up faster than you can say "Ricochet". 20 years ago it was easier to fire someone when you suspected them of theft or sabotage, or for plain laziness or redundancy, so we could treat hiring as more of a gamble. Now you've got to build a case file 1/2 inch thick or else catch 'em on camera to sack them cleanly. Workers have always been a mixed bag of the motivated and lazy, it's just a lot easier to be lazy today - even if you get fired you'll not starve. But they sure know their "rights." We'll work until our hands bleed before we consider adding even a single person, and nepotism is the new way to find that worker. Can't rely on strangers.
Oh, and too many folks want to be a managers. The last two generations have been brought up to believe that actual work is somehow beneath them. They don't want to get their hands dirty, or work extra hours during crunch times.
Three things are needed to fix this: Break the fed/teacher-union monopoly on education, lower the minimum wage, and gut the "safety nets." When Americans are hungry for work again, when they NEED work, they'll come grumbling back.
3. American Business Acumen - Claire's foreign friend does hit at a truth: Too many American businesses are run by idiots and accountants. You've got companies that don't pay on time, companies that abuse both their customers and their suppliers, and companies that are just coasting on their reputations. But those companies are starting to die rapidly, even in my industry where we have a natural protection against foreign competition. As these old companies fail, new ones are springing up, and they "get it." They're not run by the "old-timers" who rely on corruption, old brands, and buddy networks. I'm pretty hopeful here, but these guys need a good decade (as we did) to get up to speed (and the Fed can't bail out the sclerotic old companies). When they hit their stride, watch out.
As for inventory, we maintain a 52-week supply on key parts, and we know we are unique in this. Yes, this is a huge capital tie-up, but we no longer have to pay property taxes on the parts. Many of these parts have 52-week lead times, and we can't stop shipping product on account of earthquakes, tsunamis, cyclones, or tornados. Our customers are still wedded to "just-in-time" delivery, which may make their short-term books look good, but we do factor this into our prices. "Lean Manufacturing" sounds good to managers and accountants, but you pay for it elsewhere. Our suppliers love us too because we're not constantly pestering them with pull-in orders and push-out orders. Oh, and we pay our bills on time. You don't know how critical that is. When you need to call in a favor, people will bend over backward to help knowing that you'll actually pay the bill. But this is a model unique to our type of business.
All told, businesses here may be in a funk, but it's a generational funk. Our predecessors outsourced and out-promoted themselves out of work, but younger companies are rising up to fill the vacancies. They can afford the high tech gear to make their own products, and they watched as their older competition let the accountants sink 'em. There are serious problems in the labor force to be sure, and don't get me started on taxes (I need a bumper sticker that says "I pay YOUR taxes") and regulations, but "the bones are still good." It's not all doom and gloom.