By: Andre Mouton, Minyanville It’s called reshoring, and it’s a popular thing to do. Apple announced last December that it planned to bring some of its PC production back to the United States, sparking protests from Hewlett-Packard, who claims it never (entirely) left. Lenovo is looking to build some Think-branded notebooks in North Carolina, while Foxconn is mulling the expansion of its US operations. “In general, customers want more to be done there,” said a Foxconn spokesperson. Tim Cook, Apple’s CEO, argues that the company has “a responsibility to create jobs.” In other words, this has nothing to do with increased labor costs in China, Apple’s supply chain issues, or anything that might alarm shareholders. It’s simply the right thing to do. At the same time, President Obama has made reshoring (or “onshoring”) a part of the national agenda. General Electric (GE) dutifully became the poster child for the movement, and a story in the Atlantic chronicles the company’s attempt to relocate appliance manufacture from China to Kentucky. GE was surprised to discover it could cut the price of a water heater 20% by producing it domestically. It seems there are some advantages to having a factory close to market, and even more to employing assembly-line workers who share a common language with R&D staff. Outsourcing allows companies to make existing products cheaper, but throws roadblocks in the development of new designs, and hinders the ability to produce new products quickly and in the desired quantity. In the early and mid-’00s, HP and Dell moved PC production overseas to remain competitive in laptops, where the market was mature and competed on price; but they found themselves outmaneuvered when netbooks and tablets arrived. These segments were quickly dominated by Asian firms Asus and Acer, and of course Apple – as always an outlier, and proof of the gains to innovation. So moral imperative isn’t the only reason for bringing some production home. The economics can be compelling as well, and tech companies have an even stronger motivation: cash. Outsourcing has left the industry with bloated balance sheets and little to invest in. Apple holds $120 billion in cash and investments; Cisco, $50 billion; Dell and...

By: Alex Kowalski, Bloomberg American factories expanded in February at the fastest pace in almost two years, spurred by a jump in orders that is helping propel an economy about to be tested by federal government cutbacks. The Institute for Supply Management’s factory index rose to 54.2, the highest reading since June 2011, the Tempe, Arizona- based group said today. Other data showed consumer spending rose in January even as incomes plunged, and household confidence climbed last month. Companies such as Applied Materials Inc. (AMAT) are benefiting from growing demand as businesses boost spending and economies in emerging markets pick up. Combined with a rebound in housing and sustained gains in household purchases, the factory gains will help lift growth, after the economy stagnated in the fourth quarter, even as across-the-board budget cuts set in. “The data continue to be consistent with a moderate recovery,” said Dean Maki, chief U.S. economist in New York for Barclays Plc. “Production is picking up and that is a key reason why we think growth will be stronger in the first quarter. Underlying all this is a pretty steady pace of consumer spending. Auto sales and housing are quite solid right now. The economy can withstand some fiscal tightening without going into recession.” Personal spending rose in January even as incomes dropped by the most in 20 years, a report from the Commerce Department showed. Household purchases, which account for about 70 percent of the economy, climbed 0.2 percent after a 0.1 percent gain the prior month. Incomes slumped 3.6 percent, sending the saving rate down to the lowest level since November 2007. Consumer Sentiment Thomson Reuters/University of Michigan said today its final index of consumer sentiment climbed in February to a three-month high of 77.6 from 73.8 a month earlier. The gauge was projected to match the preliminary reading of 76.3, according to the median estimate in a Bloomberg survey. Stocks rose, reversing early losses, after the reports. The Standard & Poor’s 500 Index advanced 0.2 percent to 1,518.2 at the close in New York, after declining as much as 0.9 percent earlier. The pickup at U.S. factories comes as the rest of world’s producers struggle to...

By: Katarina Gustafsson and John D. Stoll, The Wall Street Journal STOCKHOLM—Ronnie Leten gets a kick out of the competition taking place these days between his staffers in China and the U.S. Since 2009, the Belgian-born chief executive of Swedish industrial giant Atlas Copco has watched the two groups send a statue back and forth as they battle to be the company’s top market. The losing side gets stuck with the trophy and, in 2013, the dubious prize is sitting in China. If Mr. Leten’s plan holds, the trophy may have to get comfortable sitting in Asia. Incentivized by cheaper energy costs and a more favorable labor and regulatory environment, Atlas Copco is finding its groove in the U.S. and sees American manufacturing as a growing alternative to sending work to Asia. The world’s largest maker of air compressors is the biggest holding of Swedish investment company Investor AB, but strong currencies, inflexible labor terms and a sluggish economy has it looking outside of its home continent. “We used to be a strong European player with a leg in the U.S.,” Mr. Leten said during an interview conducted before flying to the U.S. to ring the opening bell on the Nasdaq. “You need to define U.S. as your home market.” Mr. Leten said that by having strong “legs” in three continents—Europe, Asia, and the U.S.—it helps the company have natural currency hedges. It also helps the company have a manufacturing presence in the countries where it sells products. In addition to air compressors, Atlas Copco makes mining products and tools used for making everything from Samsung smartphones to Boeing airplanes. Atlas Copco isn’t alone among European industrial heavyweights eyeing growth in the U.S. Skanska AB, a Swedish construction company, is looking to offset the malaise in Europe and sidestep the unpredictability in emerging markets by pumping loads of investment due to a positive view on infrastructure development and corporate activity. Atlas Copco has grown its U.S. presence in recent years through a series of acquisitions and organic growth initiatives. Last year, the company purchased a Utah-based manufacturer of drill bits and a Houston-based maker of blowers and pumps. In 2009, it bought the 90-year-old Quincy...

By: AP News, Businessweek U.S. manufacturing probably expanded for the third straight month in February, although at a slightly slower pace than the previous month. Economists forecast that the Institute for Supply Management’s manufacturing index dipped to 52.5 from 53.1 in January. Readings above 50 indicate expansion. The ISM will release the report at 10 a.m. EST Friday, March 1. The ISM is a trade group of purchasing managers. In January, manufacturing grew at the fastest pace since April, driven by a sharp rise in new orders and more hiring. It was the second straight monthly increase in the closely watched gauge of manufacturing activity, a sign that factories may be starting to recover after slumping through most of 2012. January’s increase was also encouraging because it showed that demand for factory goods increased even as consumers started to pay higher Social Security taxes, which reduced take-home pay. Factory output could rise in the coming months. In January, businesses ramped up their orders for industrial machinery, electrical equipment and other capital goods by the most in more than a year. That suggested they are confident about their future growth. Consumer confidence rebounded in February after a steep fall the previous month. Nearly all workers saw their Social Security taxes increase Jan. 1, which will likely slow consumer spending. But the recovery in confidence suggests Americans are adjusting to the tax increase. Auto sales, meanwhile, jumped 14 percent in January compared to a year earlier. It was the best January in five years. Still, some economists fear factory output will be held back by $85 billion in government spending cuts that are set to take effect Friday. Those cuts will force the Defense Department and other agencies to buy fewer goods. Consumer spending may remain weak for several more months because of the tax increase. And an ongoing recession in Europe is likely to hold back exports to that region. Industrial production fell in January after two months of increases, the Federal Reserve said. Much of the decline reflected a big drop in auto production that was likely temporary. With sales rising, production will likely rebound in February. The economy expanded at only a 0.1...

By: Joel Hans, Manufacturing.net Automation GT, an automation design-and-manufacturing firm based out of Escondido, Calif., is at the forefront of the “re-shoring” trend that has been sweeping the American manufacturing landscape. The company, which has deployed automation solutions in a handful of industries — aerospace, automotive, pharmaceutical and medical devices, to name a few — has seen some of its largest clients put serious thought into the business case of bringing work back to America. Simon Grant, Automation GT’s CEO and President, says the re-shoring issue has become more prevalent in during early and mid-2012. Even though most of the industry has been aware of the trend, Grant says only recently has there been a “re-awakening” of the capital budgets among his company’s Fortune 100 customers. And while a post-Great Recession economy might give major corporations more flexibility in which to consider the prospect of bringing jobs back to America, it’s not the only reason to pursue the business case There are the typical reasons that a manufacturer considers re-shoring, which Grant says circle around “labor cost and conditions, compliance, intellectual property and time to market.” With labor costs in China rapidly rising, more companies are starting to realize that the total cost of ownership of a given product is not quite as compelling for the off-shore side. The total cost of ownership equation now includes time in freight, which can swing wildly due to delays and weather conditions. Add in unfavorable tax-and-duty situations, and the price outlook ge1ts even worse. Grant says that many manufacturers have left themselves open to being affected by impossible-to-predict weather conditions, such as the recent Hurricane Sandy, which struck the East Coast with devastating effect in October 2012. The longer the supply chain from point of manufacturing to point of sale, the risk increases dramatically. He says, “One customer recently missed a key market opportunity due to their product sitting on a container ship waiting for east coast ports to re-open.” While no amount of re-shoring can guarantee that a company’s operations will be free from similar disasters, it does significantly lower the barrier to finding a workaround that will get product where it needs to be to keep...