Reshoring Exceeded Offshoring in 2016: Policy Changes Needed…

Reshoring Exceeded Offshoring in 2016: Policy Changes Needed…

May 15, 2017

Reshoring Initiative 2016 Data Report Reshoring Exceeded Offshoring in 2016: Policy Changes Needed to Maintain Momentum Kildeer, IL. May 15, 2017 — For the first time in decades, more manufacturing jobs are returning to the United States than are going offshore. The combined reshoring and foreign direct investment (FDI) trends grew by over 10 percent in 2016, adding 77,000 jobs (tying the 2014 record) and exceeding the rate of offshoring by about 27,000 jobs. The 2016 results bring the total number of manufacturing jobs brought back from offshore to more than 338,000 since the manufacturing employment low of February 2010. There are still huge opportunities and challenges to bringing back all the 3 to 4 million manufacturing jobs cumulatively lost to offshoring. The rate of job return announcements doubled in November 2016 and hit an all-time peak monthly record in January 2017. Clearly, government policy changes and expectations of those changes are key to accelerating the trend. Overview The Reshoring Initiative’s 2016 Reshoring Report contains data on U.S. reshoring and FDI by companies that have returned U.S. production or sourcing from offshore. The report includes cumulative data from 2010 through 2016, as well as highlights from the first quarter of 2017. In comparison to 2000-2003, when the United States lost, net, about 220,000 manufacturing jobs per year to offshoring, 2016 achieved a net gain of 27,000. The tide has turned. The numbers demonstrate that reshoring and FDI are important contributing factors to the country’s rebounding manufacturing sector. The overall trend was up from 2015 due to anticipation of potential policy changes that will make the United States more competitive, continued rising wages overseas, and increased use of total cost of ownership for sourcing decisions. “We publish this data annually to show companies that their peers are successfully reshoring and that they should reevaluate their sourcing and siting decisions,” said Harry Moser, founder and president of the Reshoring Initiative. “With 3 to 4 million manufacturing jobs still offshore, as measured by our $500 billion/year trade deficit, there is potential for much more growth. We call on the administration and Congress to enact policy changes to make the United States competitive again. Our Competitiveness Toolkit is...

How AI & Robots Will Bring Manufacturing Home to the U.S.

How AI & Robots Will Bring Manufacturing Home to the U.S.

Sep 27, 2016

“How AI & Robots Will Bring Manufacturing Home to the U.S.” By Tom Vander Ark, Getting Smart Imagine custom shirts and shoes at mass production prices with same day delivery; imagine turbine parts produced at the airport where and when they are needed; imagine a new tooth made while you’re in the dentist chair. The age of smart local manufacturing is just around the corner. Often called Industry 4.0, this new wave manufacturing incorporated connected devices (internet of things: IoT), cloud computing and machine learning. The term Industry 4.0 originated in 2011 with German government-funded research on advanced manufacturing. Christoph Roser at AllAboutLean.com explains: The first industrial revolution was the Industrial Revolution between 1760 and 1820ish, which brought us steam power and mechanization through spinning mills. The second industrial revolution was mass production, starting around 1870, but best known for the assembly lines of Henry Ford 1913. The third industrial revolution was the introduction of computers and automation in manufacturing from 1950 onward. The fourth industrial revolution is cyber-physical systems.     End of the Flight to Cheap Labor “Much of the labor intensive manufacturing moved to areas of the world where cheap labor was abundant and had the raw material or the ability to bring them in and ship the product at a reasonable rate,” said Charles Speelman, Superintendent of the Tri-Rivers Career Center in Marion Ohio (below). Jimmy Carter’s inauguration in 1977 marked the peak of U.S. manufacturing employment. Outsourcing really accelerated after Bush took office in 2001. “Everyday low prices” became a staple Wal-Mart thanks to cheap Chinese labor. But in the last ten years, the rise of the Chinese (and Mexican and Vietnamese) middle class reduced the labor arbitrage. Third wave factories invested in automation reducing labor as a percentage of total costs. Beginning in 2010, U.S. manufacturing employment began to rise with the first hints of onshoring. Car manufacturing is an interesting signal: while parts are made worldwide, Hondas are built in Ohio and Alabama, BMW and Mercedes are made in South Carolina, Toyotas are made in Indiana and Volkswagens are built in Tennessee. Automation is making U.S. products more competitive compared with similar goods sourced from low-cost countries. In a 2015...

Reshoring Initiative 2014 Data Report Emphasizes Positive…

Reshoring Initiative 2014 Data Report Emphasizes Positive…

May 4, 2015

“Reshoring Initiative 2014 Data Report Emphasizes Positive Job Trends” CHICAGO, Ill. April 28, 2015 — The Reshoring Initiative, an organization committed to helping manufacturers recognize the profit potential of utilizing local sourcing and production, has published its annual data report on reshoring trends, and the news is good. More than 60,000 manufacturing jobs were brought to the United States by reshoring and Foreign Direct Investment (FDI) combined in 2014, representing a 400 percent increase since 2003. With only 30,000 – 50,000 jobs being offshored to other countries in 2014, the resulting net gain of 10,000 or more jobs per year represents a shift in the right direction. By comparison in 2003, the United States lost net about 140,000 manufacturing jobs per year to offshoring. The steady decrease in the number of jobs lost, capped by a net gain last year, is building confidence that reshoring and FDI are important contributing factors to the country’s manufacturing rebound. Data for this report comes from the Reshoring Initiative’s Reshoring Library of more than 2,000 published articles, privately submitted reshoring case studies and some other privately documented cases. The report provides data and analysis in 13 different categories ranging from the number of manufacturing jobs lost to offshoring and reasons cited for reshoring to a breakdown of data by industry, country, region and state. It also includes an international summary of cases reshored to other countries. Of particular interest are the reasons companies gave for reshoring and FDI. Government incentives, the skilled workforce, capitalizing on the value of a Made in USA label, and automation topped the list in 2014. At the same time, companies cited lower quality, long lead times, high freight costs and rising wages as reasons against offshoring. The data also indicates that reshoring was strongest in the Southeast and Texas, a trend consistent with The Boston Consulting Group’s (BCG) forecast for those areas to lead the way in becoming competitive with China for the manufacture of products to be sold domestically. Much of this is attributed to the trend for companies to build “green-field” factories in states with lower wages, lower taxes and right-to-work laws. “We publish this data annually to show companies that...

Manufacturers Take a Global Approach to Reshoring Decisions

By: Steve Minter, IndustryWeek Leaders from NCR and Jarden offer insights at the IW Best Plants conference into why manufacturing operations were brought back to the U.S. Though it has been heralded for a significant U.S. reshoring action, that decision fit firmly in NCR’s commitment to a global structure to serve its markets, Rick Marquardt, senior vice president of global operations, told attendees at the IndustryWeek Best Plants Conference in Greenville, S.C. Marquardt joined Patricia Gaglione, senior vice president of Business Operations and Supply Chain at Jarden Corp., to share their experiences with reshoring in an executive panel moderated by Harry Moser, founder and president of the Reshoring Initiative When Marquardt joined NCR in 2006, he had toured the company’s facilities, found them antiquated and decided it would be best to sell them and outsource production. He closed factories in Scotland, Brazil, Canada and Dallas. He decided to improve the facilities in China so that they could be sold. However, he hired new managers for the plants and told them that if they could improve productivity, he would keep them open. At the same time, he outsourced a large amount of work to a contract manufacturer. “After two years, my internal plants were beating them so handily in costs, speed and delivery that we decided to bring it all back in,” said Marquardt. In 2009, NCR decided to produce ATMs at a new facility in Columbus, Ga. Marquardt recalled that he had been on a whirlwind tour of possible sites when he landed in Columbus. Unlike the indifferent reception he had received in some other cities, Columbus officials pulled out all the stops to impress him. He was met by the mayor and the chamber of commerce, as well as representatives from three companies that had already relocated to Columbus and from Duke Energy. Within 15 minutes, the site that had been last on his list had convinced him to locate there. Since it opened, the Columbus facility has grown to 600 employees and NCR has opened two more sites in Columbus. The plant enables NCR to serve its U.S. core customers – big box retailers and banks – with innovative products that it can deliver...

Pumping Muscle into U.S. Manufacturing

By: Craig Barner, Forbes A number of recent initiatives, including a couple in the Midwest, are seeking to pump muscle into U.S. manufacturing as fresh data on industrial activity gives M&A professionals reason for optimism. The Institute for Supply Management announced that U.S. manufacturing picked up in January to its highest level in nine months, as new orders and employment improved. The organization’s index of national factory activity rose to 53.1 from 50.2 in December; a reading above 50 indicates expansion. Also, the Association of Manufacturing Technology announced that orders among member companies in December were at their highest level in 13 years and that it expects a 2012 total of $5.71 billion, an increase of 2.6 percent from 2011. Three investment bankers who focus on industrials said M&A could increase if U.S. manufacturing goes up. “I think it could spur activity,” said Robert Billow, a managing director at Billow Butler & Co., an investment bank in Chicago. In particular, defense, electronics and automation/material handling could see the biggest increases, he said. The initiative that has attracted the most interest from Wall Street is the Reshoring Initiative. The project, based in Kildeer, Illinois, aims to bring manufacturing jobs back to the U.S., said Harry Moser, president. A key element is to assist companies in assessing their total cost of offshoring and “shift collective thinking from ‘offshoring is cheaper’ to ‘local reduces the total cost of ownership,’” according to the RI’s mission statement. About 60 percent of manufactures apply a “rudimentary” model to assess the total cost of manufacturing products abroad, said Moser, an engineer who trained at the Massachusetts Institute of Technology. Such organizations ignore 20 percent or more of the total cost for offshoring, he said. A tool on the RI’s website, the Total Cost Estimator, allows users to create a free account, login and calculate their true costs of offshoring. “Three or four” unnamed investing organizations—including private equity and hedge funds—have asked Moser which companies could benefit from reshoring, he said. Also, BB&T asked Moser to speak at a conference about the reshoring concept, he said. Three other initiatives have yet to attract that kind of attention from the financial community but...