Reshoring Trend Continues

Reshoring Trend Continues

Nov 26, 2018

By: Harry Moser, Reshoring Initiative

Featured on Metal Forming Magazine.com 

Harry Moser, retired president of machine-tool supplier GF AgieCharmilles, is founder and president of the Restoring Initiative, tel. 847/867-1144, www.reshoringnow.org.

Manufacturing jobs returning to the United States from offshore climbed to 171,000 in 2017 for a staggering 2800-percent increase since 2010, and equaling 90 percent of the 189,000 total manufacturing jobs added in 2017. This brought the number of jobs returned to more than one-half million since 2010. With at least half of these jobs believed to be at various levels of the supply chain, opportunities are great for metalformers.

Moreover, when measured by our $700 billion nonpetroleum goods trade deficit, we count five million U.S. manufacturing jobs offshore, representing a potential for 40-percent growth in U.S. manufacturing. The right national and corporate policies will bring these jobs back.

Tariffs/Trade War vs. Alternative Actions

The reduction in U.S. corporate tax rates and regulatory costs played a key role in bringing jobs back, and makes 2018 the right time for companies to reevaluate their offshoring decisions. The Reshoring Initiative supports the Trump administration’s trade objectives, but not the tariffs.

We have offered the administration our Competitiveness Toolkit, which outlines and quantifies alternative actions. These are intended to avoid retaliation by other countries and to avoid making some domestic sectors more competitive at the expense of others—a result of the steel tariffs.

cumulative reshoring and jobs

Fig. 1—Cumulative reshoring and foreign-direct-investment (FDI) jobs announced. Source: Reshoring Initiative Library.

Take Advantage of the Trend

Metalformers can reshore in two ways: They can decide to source or produce components or tooling domestically; or they can supply parts or tooling to customers that have decided to reshore.

Several trends drive the shift from offshoring to reshoring: the rising costs of offshore production; the impact of distance on quality, innovation, flexibility, responsiveness, inventory and availability; improved U.S. competitiveness via new production technologies; and the increased use of a more sophisticated total cost of ownership (TCO) model—provided by the Reshoring Initiative—to quantify the hidden costs and risks of offshoring.

Use the Tools

Tools offered by the Reshoring Initiative are well worth getting to know. For example, the organization’s Library shows industries and companies that are reshoring, and could be a potential source of new business for metalformers.

Another tool, the TCO Estimator, can help metalformers and their customers make better sourcing decisions. It helps companies account for all relevant factors—overhead, balance sheet, risks, corporate strategy and other external and internal business considerations—to determine the true total cost. Many companies find that rising offshore labor rates, combined with other hidden costs of offshoring, often counterbalance any remaining savings from cheap prices or labor abroad.

A real-world example of a company that used the Estimator to sell against imports is EMS contract manufacturer, Morey Corp., Woodridge, IL.

Morey, while competing against a lower-priced Asian company for a $60-million electronics build opportunity, used the TCO Estimator to show a customer that although Morey’s price was higher, its TCO was lower. “We used the TCO calculator to the costs and risks of both options and was a crucial piece to our winning strategy,” says Tony Woodall, Morey’s vice president of sales.

Another Reshoring Initiative program, the Import Substitution Program (ISP), creates opportunities for U.S. companies to compete against imported products, leading to reshoring. Designed to enable companies, industry associations, equipment suppliers and economic developers to substitute domestic production for imports, ISP identifies and qualifies relevant importers as reshoring candidates. Companies can keep current with ISP updates by signing up for the Reshoring Initiative eNewsletter.

Finally, we welcome news of reshoring and foreign-direct-investment successes. Share yours at info@reshorenow.org and we’ll provide you with publicity and a “Manufacturing Is Cool” t-shirt. And don’t forget to enter the National Metalworking Reshoring Award Competition. See box for details. MF

 

National Metalworking Reshoring Award

Eligibility

1) Reshoring of work that occurred between January 1, 2013 and December 31, 2018.

2) Work came back from outside North America to North America.

3) Products, parts or tooling reshored must be made primarily by forming, casting, fabricating or machining, including additive manufacturing.

4) Application must be submitted by January 31, 2019.

The award winner will be announced on March 8, 2019, at the MFG Meeting in Tucson, AZ.

For details, visit www.reshoringnow.org.

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