This is another post from Harry Moser and The Reshoring Initiative. Reshoring is an ongoing and important movement currently happening in North America. For a full explanation about reshoring manufacturing make sure you check out Mr. Moser’s first post where he explains what it is and who are the reshoring companies in North America.
The following post first appeared in Business Climate on October 7th and is re-purposed here with permission. If you would like to know more about The Reshoring Initiative and what they are trying to achieve, please visit them at ReshoreNow.org.
Reshoring Companies: It’s Not Just About the OEMs
Harry Moser is best perhaps the best-known voice in the reshoring movement, the return of manufacturing from overseas markets. Moser, the founder and president of the Reshoring Initiative, shared reshoring insights and strategies with economic development professionals at the 2013 IEDC conference. Quick hits from the Godfather of Reshoring:
- Over the last three years, an estimated 80,000 manufacturing jobs have returned to the United States from overseas, about 60 percent of them from China. Citing research from the Boston Consulting Group and others, Moser says a number of forces are making it more advantageous for a range of products to be made closer to the marketplace. Among them: appliances such as refrigerators and dishwashers (for example, what GE is doing at Appliance Park in Louisville) , computers and electronics, transportation products, heavy machinery and high-end items subject to frequent changes in consumer demand or changes in color.
- More companies are looking beyond the basic costs such as labor and weighing the impact of dislocation of engineering and manufacturing, intellectual property concerns, supply chain risks, quality issues, time to market delays and transportation, what Moser calls the “total cost of ownership” that can add 20 percent to the production cost. In addition, wage rates in China have risen 320 percent since 2000. ”About 60 percent of companies (that off shored production) didn’t do the math,” Moser says.
- Economic development organizations should focus less on landing the “big elephant” reshoring projects and more on cultivating the supply chain. EDOs should identify original equipment manufacturers (OEMs) that offshore production, work with them to determine work that makes economic sense to reshore and connect them to the contract manufacturers and components makers in their communities. “Build up an ecosystem around the big company and create a network of suppliers 50 to 100 miles around them,” Moser says. ” They will bring jobs back to your region because it is in their self interest.”
- Walmart is a growing force in the reshoring movement. The retailer is ramping up efforts to find more U.S.-made sourcing for the products it carries in its stores. “If if you have Walmart suppliers in your region, identify them and see how you can help them supply more,” Moser says.
- Workforce development is the No. 1 issue related to reshoring and manufacturing in development in general. Economic development professionals need to take the lead in working with business, schools and government leaders to recast manufacturing as a career option. The U.S. needs more innovative partnerships that promote apprenticeship programs starting at the high school level, such as theApprenticeship 2000 effort in the Charlotte area and a unique industry-led effort in Pasco County, FL. EDOs can help schools document local career successes, provide ROI on skills training and show how a manufacturing career can compare to a degree-path career.
“We need to get rid of the trades and vocational image and call them professions. In Germany and Switzerland, it is the tool and die profession,” Moser says. “We need to show case studies of how manufacturing is coming back. It is not a dead end and not a hopeless case. Right now half the lawyers graduating can’t find jobs – the toolmakers can.”
Reshoring Companies Video: The Effects of Outsourcing and How We can ALL Help Reverse Job Loss
Speaking of Reshoring companies from overseas back to North America, we were shared a great video from Sandy Mantalabo, who works at The Reshoring Initiative. The video really highlights the full impact that outsouricng had on our country and how each and every one of us can do something very simple to reverse this trend and increase both jobs and get companies to consider reshoring. View below and don’t forget to SHARE the video!