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. 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...

U.S., Canada reach deal to save NAFTA as trilateral trade pact

U.S., Canada reach deal to save NAFTA as trilateral trade pact

Oct 1, 2018

President Trump had threatened to splinter the nearly 25-year-old North American Free Trade Agreement into a bilateral pact with Mexico. By Reuters, NBC News WASHINGTON — The United States and Canada reached a deal on Sunday to salvage NAFTA as a trilateral pact with Mexico, beating a midnight deadline with agreements to substantially boost American access to Canada’s dairy market and protect Canada from possible U.S. auto tariffs, sources with direct knowledge of the talks said. President Donald Trump had threatened to splinter the nearly 25-year-old North American Free Trade Agreement into a bilateral pact with Mexico and tax Canadian vehicle exports to the United States if Ottawa had failed to sign on before a midnight Sunday deadline. But Trump has approved the “framework” deal with Canada, a source familiar with the decision said, just days after he sharply criticized Canadian Prime Minister Justin Trudeau and his NAFTA negotiating team. Trump blames NAFTA for the loss of American manufacturing jobs and wants major changes to the pact, which underpins $1.2 trillion in annual trade. Markets fear its demise would cause major economic disruption. Negotiators from both sides spent two days talking by phone as they tried to settle a range of difficult issues, such as access to Canada’s closed dairy market and U.S. tariffs. The deal will preserve a trade dispute settlement mechanism that Canada fought hard to maintain to protect its lumber industry and other sectors from U.S. anti-dumping tariffs, Canadian sources said. Late last night, our deadline, we reached a wonderful new Trade Deal with Canada, to be added into the deal already reached with Mexico. The new name will be The United States Mexico Canada Agreement, or USMCA. It is a great deal for all three countries, solves the many…… — Donald J. Trump (@realDonaldTrump) October 1, 2018 ….deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduces Trade Barriers to the U.S. and will bring all three Great Nations together in competition with the rest of the world. The USMCA is a historic transaction! — Donald J. Trump (@realDonaldTrump) October 1, 2018 Congratulations to Mexico and Canada! — Donald J. Trump (@realDonaldTrump) October 1, 2018 But this came...

Trade War Casualties: Factories Shifting Out Of China

Trade War Casualties: Factories Shifting Out Of China

Jul 30, 2018

By Kenneth Rapoza, Contributor, Forbes Supply chains starting to shift at a faster pace as companies look to avoid tariffs.  China-based manufacturers were already in the process of moving to lower-cost Southeast Asia. Now that trade tariffs have been enacted on at least $50 billion worth of goods, and another $200 billion likely by summer’s end, they are shifting their supply chain. It’s happening. “With recent tariff battles, companies aren’t as eager to have production in China,” says Nathan Resnick, CEO of startup company Sourcify. The business-to-business manufacturing platform has offices in San Diego and Guangzhou. “We run production runs in India, Bangladesh, Vietnam, Philippines, and Mexico right now. Labor costs are actually more affordable outside of China, so for products like apparel where there is a lot of cut-and-sew labor, most companies are moving out of China anyway,” he says. Sourcify raised $2.5 million through Y Combinator this winter. “I’ve been going back and forth to China for years, and it is getting more expensive. With all these tariffs coming, why not run some of your production runs elsewhere? Companies are saying that the scare of these tariffs has decreased the incentives to manufacture in China.” Sourcify is small, but Kerry Logistics Network, a Hong Kong-listed firm owned by Malaysia’s billionaire Kuok family, is not. The South China Morning Post reported that Kerry shifted part of its production lines from mainland China to its corporate home further south in order to avoid tariffs. “Our clients have been shifting part of their production lines as early as March from China to other Asian countries where they already have manufacturing plants,” William Ma Wing-kai, Kerry’s managing director, was quoted saying in the Hong Kong daily. “This is a reallocation of global production bases,” Ma said. For the last couple of years, China has been moving to a more automated assembly line, pushing lower-cost manufacturing to Vietnam and elsewhere. China is now one of the world’s largest producers of robotics used in manufacturing assembly lines. As the country moves up the value chain, old-school labor like stitch-and-sew apparel manufacturing is leaving the country. Now that the tariffs are in place, with more promised, companies that were...

Other Voices: Is the time right for reshoring?

Other Voices: Is the time right for reshoring?

Jul 16, 2018

By Harry Moser, Modern Materials Handling New research -as well as incentives like lower corporate tax rates – suggest that it is. It’s hard not to pick up a newspaper or listen to a news report without hearing that U.S. manufacturers are reshoring production, and jobs, back to the U.S. It’s a cause we have been dedicated to at the Reshoring Initiative. There are a number of reasons why we believe that 2018 is the right for companies to re-evaluate their offshoring decisions. Among them are the reduction in U.S. corporate tax rates and regulatory costs and the approximately nine percent decline in the USD from Jan. 2017 to Jan. 2018. Recent academic research provides useful detailed insight into how and why some organizations have reevaluated their offshoring decisions, leading to decisions to reshore. The results are generally consistent with the analyses of data collected by my organization, the Reshoring Initiative, based on a larger population of reshorers. In a recent article entitled “Why in the world did they reshore? Examining small to medium-sized manufacturer decisions,” John V. Gray, Gökçe Esenduran, M. Johnny Rungtusanatham, and Keith Skowronski looked at four small-to-medium-size enterprises, or SMEs, with headquarters and demand in the U.S., that had moved their manufacturing operations from low-cost locations in Asia back to high-cost countries. Two of the companies are located in the Midwest and two are in the West, with product categories ranging from power transmission equipment to measuring and controlling devices, to fabricated metal products to apparel. The authors found that these reshoring decisions are driven by factors beyond changing location-related costs. The Reshoring Initiative and John V. Gray, one of the co-authors and a professor at The Ohio State University’s Fisher College of Business, have discussed the reshoring phenomenon for years. This article is an effort to compare the results from the in-depth academic research of a small number of firms by Gray and his colleagues, and the larger-scale survey data collected by our organization. To differentiate between their work and ours, any numerical results related to the work of the Reshoring Initiative are italicized. Lessons Learned 1. Remedying the Unintended Consequences  SMEs are correcting the unintended consequences of initial offshoring decisions...

171,000 Jobs Come Home to USA in 2017

171,000 Jobs Come Home to USA in 2017

Jun 4, 2018

By Frank Spotorno with Dan Murphy, Yonkers Times A recent report by our friends at The Reshoring Initiative (reshorenow.org) found that last year, 2017, the USA saw an increase in manufacturing jobs coming back to this country, or reshoring, at a record pace: 171,000 jobs have returned as a result of reshoring or foreign investment. American companies are shifting their production of goods from outside the U.S. and bringing their jobs home. While the 171,000 jobs that returned last year is significant, projected figures from this year show that the trend toward making it in the USA is continuing. While some of the reasons for the return of manufacturing jobs to the USA can be attributed to President Donald Trump and his “Buy American, Hire American” initiative, other factors that add to the bottom line of U.S. companies include proximity to customers, government incentives, and the value of “Made in the USA” branding. Harry Mosher, president of the Reshoring Initiative, said that more jobs will continue to come back to the USA. “With 3 million to 4 million manufacturing jobs still offshore, as measured by our $500 billion-per-year trade deficit, there is potential for much more growth,” he said. “We call on the administration and Congress to enact policy changes to make the United States competitive again.” Mosher added that a strong dollar and a stronger skilled U.S. workforce helps continue the wave of jobs coming back home. The Reshoring Initiative has been calculating the cost of doing business for American companies overseas, and comparing it to making it in the USA for more than a decade. Every year the cost of building goods and products in China, in comparison to the USA, has narrowed and is now at the point where it makes real business sense to return manufacturing plants back to America. “We know where the imports are by country, and we know the price difference between the foreign price and the U.S price,” said Mosher. “The total cost of foreign-made goods delivered to the U.S. is a full 95 percent of the cost of U.S.-produced goods. We know how much you have to shift it to make the U.S. competitive with China.”...