There have been many recommendations of how to revive American manufacturing and create the jobs Americans need, but most job creation programs proposed by commentators, politicians and economists involve either increased government spending or reductions in employment or income taxes at a time of soaring budget deficits and decreased government revenue. Other recommendations would require legislation to change policies on taxation, regulation, or trade that would be difficult to accomplish. Many of these solutions involve borrowing money now, largely from China, or taking money from one group of citizens or a future generation to give to another. Other programs call for Chinese currency revaluation or tariffs, which would help the manufacturing industry, but would increase consumer prices.
In contrast, the move to bring back manufacturing production to the United States, called Reshoring, has grown increasingly popular over the last few years. Reshoring brings jobs directly back from offshore, often from the LLCCs (Low Labor Cost Countries) that have grown so rapidly over the last decades at the expense of American workers, American manufacturing companies, and the overall U.S. economy. Higher transportation and fuel costs, escalating wage rates in developing countries like China, and serious, sometimes life threatening, quality problems with products made in China are providing added impetus to this trend.
Reshoring breaks out of the waiting-for-policy-decisions problem, the economic zero-sum-game and the increases in consumer prices and assures that the pie grows to the advantage of all Americans. Reshoring also focuses on the manufacturing sector that has suffered so many job losses for decades and the Small-to-Medium Enterprises (SMEs) that offer the best potential for job growth.
To help accelerate this trend, there is a new initiative with a plan to efficiently reduce our imports, increase our “net exports” and regain manufacturing jobs in a non-protectionist manner. The Reshoring Initiative was founded by Harry Moser, retired president of Agie Chamille LLC, a leading machine tool supplier in Lincolnshire, Illinois. The Initiative shows how outsourcing within the United States can reduce a company’s Total Cost of Ownership (TCO) of purchased parts and tooling and offer a host of other benefits while bringing U.S. manufacturing jobs home.
The Initiative documents the benefits of sourcing in the United States for large manufacturers and helps suppliers convince their U.S. customers to source local. Archstone Consulting’s 2009 survey showed that 60% of manufacturers use “rudimentary total cost models” and ignore 20% of the cost of offshoring. If a manufacturer is not accounting for 20% of their costs to offshore, offshoring may not be the most economical decision. In tough economic times and stiff global competition, no company can afford this. To help companies make better sourcing decisions the Reshoring Initiative provides:
- A free Total Cost of Ownership (TCO) software that helps manufacturers calculate the real offshoring impact on their P&L
- Publicity to drive the reshoring trend
- An online Library of 98 articles about successful Reshorings
- Access to NTMA/PMA Contract Manufacturing Purchasing Fairs to help manufacturers find competitive U.S. sources.
Manufacturing companies can reshore to:
- Reduce pipeline and surge inventory impacts on Just-in-time operations
- Improve the quality and consistency of products
- Cluster manufacturing near R&D facilities, enhancing innovation
- Reduce Intellectual Property and regulatory compliance risk
- Reduce total Cost of Ownership (TCO)
The Initiative has received increasing visibility and influence: recognition by Industry Week magazine via its 2010 Manufacturing Hall of Fame, inclusion of the TCO concept in Cong. Wolf’s (R VA) “Bring Jobs Back to America Act” (H.R.516); numerous webinars; dozens of industry articles; presentations in major industry and government policy conferences in Chicago and Washington, DC; and coverage by CBS, CNBC, WSJ, USATODAY and the Lean Nation radio show.
The Initiative is succeeding in changing OEMs’ behavior. Companies have committed to reshore after reading Initiative articles. Fifty-seven representatives from large manufacturers and 113 custom U.S. manufacturers attended the May 12, 2010 NTMA/PMA Contract Manufacturing Purchasing Fair, where OEMs found competitive domestic suppliers to manufacture parts and tooling. Sixty-four percent of the OEMs brought back to the U. S. at least some work that was currently offshored.
On the February 4, 2011, the Illinois Reshoring Initiative announced its program to apply the principles of the national Reshoring Initiative to revitalize Illinois manufacturing by reshoring to bring back many of the most desirable jobs that have been lost to decades of offshoring. This industry-led initiative will utilize an integrated, measurable, five-step program to help large manufacturers and their local suppliers recognize the total P & L impact of offshoring and the benefits that both will obtain from reshoring. The program features keynote speakers, Peter M. Perez, Deputy Assistant Secretary for Manufacturing, U. S. Department of Commerce’s International Trade Administration, and Harry Moser, founder of the national Reshoring Initiative.
Mr. Moser commented, “In the past manufacturing conferences have presented good ideas but offered few tools and no follow-up. The Illinois Reshoring Initiative’s year-long program provides the TCO Estimator free to attendees and has 5 integrated steps that will assure that the good ideas are implemented and the results measured.” The Illinois Reshoring Initiative Conference will be held 7:45 AM to 11 AM, March 16, 2011 at Wojcik Center, Harper College, Palatine, IL 60067. To register for the conference go to http://illinoisreshore.eventbrite.com/.
The Reshoring Initiative www.reshorenow.org is supported by: the Association for Manufacturing Technology (AMT) www.amtonline.org; Sescoi, , www.sescoi.com/ ; GF AgieCharmilles, www.gfac.com/us; the Association for Manufacturing Excellence (AME) www.AME.org,; the National Tooling and Machining Association (NTMA) www.ntma.org and by the Swiss Machine Tool Society (SMTS) www.smts.org . Additional information on the NTMA/PMA Purchasing Fairs can be found at www.purchasingfair.com.
Nice post.
I see how we in the industrial sector are coming together on this issue of restoring manufacturing in the U.S., but I wonder what it will take to convince a disconnected, if not downright skeptical, public to allow us to do so.
There are many active groups seeking to ‘dead hand’ industrial lands from further non-residential re-use and this will stand in the way of re-generating basic industries such as mining and primary steel production.