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.”...

U.S. Delays Decision On Tariffs For EU…

U.S. Delays Decision On Tariffs For EU…

May 1, 2018

“U.S. Delays Decision On Tariffs For EU, Prolonging Uncertainty” By Christopher Rugaber & Ken Thomas, AP Writers Featured on Manufacturing Business Technology WASHINGTON (AP) — The U.S. government will take another 30 days to decide whether to impose tariffs on imports of steel and aluminum from the European Union, Canada and Mexico, extending a period of uncertainty for businesses in those regions. The delay helps the U.S. avoid a potential trade war with allies as it prepares for tense trade talks in China this week. But the EU slammed the decision as bad for business that “prolongs market uncertainty, which is already affecting business decisions.” “As a longstanding partner and friend of the U.S., we will not negotiate under threat,” the EU said in a statement Tuesday. The Trump administration said Monday it had reached an agreement with South Korea on steel imports following discussions on a revised trade agreement. And the administration said it had also reached agreements in principle with Argentina, Australia and Brazil on steel and aluminum that will be finalized shortly. “In all of these negotiations, the administration is focused on quotas that will restrain imports, prevent transshipment and protect the national security,” the White House said. Facing a self-imposed deadline, President Donald Trump was considering whether to permanently exempt the EU and Mexico, Canada, Australia, Argentina and Brazil from tariffs of 25 percent on imported steel and 10 percent on imported aluminum that his administration imposed in March. The White House had given itself until the end of Monday to decide whether to extend the exemptions. The EU has taken a tough stance, raising the prospect of a trade war if the U.S. does not back down. It has a list of retaliatory tariffs worth about $3.5 billion on imports from the U.S. that it will activate if the EU loses its exemption. Germany said it continues to expect a permanent exemption. The EU’s largest steel exporter to the U.S., it accounted for about 5 percent of U.S. steel imports last year. “Neither the EU nor the U.S. can have an interest in an escalation of their trade tensions,” a spokeswoman for Chancellor Angela Merkel said Tuesday in a...

Manufacturers expanding at fastest pace in three years…

Manufacturers expanding at fastest pace in three years…

Apr 25, 2018

“Manufacturers expanding at fastest pace in three years, flash PMI data show” By Jeffry Bartash, MarketWatch U.S. economy is speeding up again, but inflation is warming up too, IHS Markit finds The numbers: American companies grew faster in April, especially manufacturers, in a reflection of a steadily expanding U.S. economy. But inflationary pressures increased as well. The flash IHS Markit U.S. manufacturing PMI climbed to 56.5 this month from 55.5 and touched a three-and-a-half-year high. Readings over 50 indicate expansion. A similar survey of service-oriented businesses that employ most Americans also rose. It edged up to 54.4 from 54. A flash reading is typically based on approximately 85%–90% of responses each month. At the same time, the survey showed the cost of raw or partly finished materials increased at the fastest pace in almost five years. Firms said the recently announced White House tariffs on steel as well as a large basket of Chinese goods were partly to blame. What happened: Businesses boosted production in April to match an increase in new orders. Companies also acted more aggressively to secure materials from suppliers because they are taking longer to deliver them. That suggests companies are running into bottlenecks, a potential hurdle for the economy if the situation gets worse. Tight supplies also mean higher prices — aka inflation. Even with new orders increasing, companies eased back on hiring. They focused more on improving efficiency — no surprise given a growing shortage of skilled labor. Big picture: The economy is ramping up for a strong spring, but shortages of skilled labor, rising inflation and the threat of widespread tariffs could put a cap on U.S. growth despite recent tax cuts and higher federal spending. Higher inflation could also spur the Federal Reserve to raise interest rates more aggressively, another potential drag on faster U.S. growth. What are they saying?: “After a relatively disappointing start to the year, the second quarter should prove a lot more encouraging,” said Chris Williamson, chief business economist at IHS...

Raising the Alarm for US Manufacturing

Raising the Alarm for US Manufacturing

Feb 7, 2018

By Steve Minter, IndustryWeek Rebuild Manufacturing: The Key to American Prosperity In her latest book chronicling the state of U.S. manufacturing and the policy changes needed to shore up the sector, Michele Nash-Hoff, a contributor to IndustryWeek, notes that one of her ancestors was Paul Revere. While Nash-Hoff has not been galloping through the Massachusetts countryside warning of British troops, she has been crisscrossing the United States in recent years visiting American factories, warning of threats to domestic manufacturing and offering advice on how to rebuild the manufacturing ecosystem. Paul Revere, a celebrated silversmith who also ran a foundry after the Revolutionary War, would be proud. Rebuild Manufacturing (Coalition for a Prosperous America, 2017) starts off with a recounting of statistics that are familiar to many manufacturers but still shocking. The U.S. lost 5.86 million manufacturing jobs between 2000 and early 2010, or roughly the populations of Chicago, Houston and Indianapolis combined. During that decade, the U.S. lost 57,000 manufacturing firms. Throughout this period and for a considerable time before, educators and parents were watching (or experiencing) what was happening in manufacturing. The lesson they imparted to countless kids: Manufacturing has no future in the U.S. and neither will you if you choose a career in a factory. Thanks to a long recovery beginning in the Obama administration and continuing in the Trump presidency, manufacturing is coming back, though that journey is far from over. Activists such as Nash-Hoff have helped turn the tide against the popular belief in Washington and other centers of economic thought that the U.S. had grown out of the need for manufacturing. It is increasingly clear that a vibrant manufacturing sector is crucial to a healthy and growing U.S. economy. In Rebuild Manufacturing, Nash-Hoff offers a wealth of information and recommendations on what can be done to strengthen U.S. manufacturing. She points the finger repeatedly at the huge trade imbalance with a mercantilist China (in 2017, nearly $309 billion through October) and calls for action by Trump and Congress to fight intellectual property theft and take a much tougher stand against acquisitions of American companies by Chinese firms. “Letting Chinese corporations acquire American companies, especially energy or technology-based companies is the biggest threat...