Here is something that's easily overlooked: bringing design and manufacturing together promotes innovation. Having a more rapid iteration cycle is important, but why? Here's a principal reason: it allows design flaws to become visible in the manufacturing, and leads to a redesign if necessary.
Having both these modules in close (spatial and temporal) proximity helps minimizing efforts spent in irrelevant problems. The general rule holds for most softwares with 'manufacturing' replaced by user appreciation.
The hidden cost of taking manufacturing offshore is that a GREAT deal of industrial knowledge is lost. How do you know a problem needs to be taken into consideration if... you don't even know what the problem is?
The glorious days of Bell Labs seems like heaven for tinkerers. Designing, implementing and manufacturing camps don't alienate but simply part of one living organism.