Tuesday, October 28, 2014

Reshoring Initiative October 2014 Newsletter

News Recap

Another Great Year at IMTS 2014

The high turnout of 114,000 attendees and strong ordering were consistent with the continuous growth of the U.S. manufacturing sector – due, in part, to reshoring. See data about how U.S. manufacturing output is up by 30% since the recession and generating a greater rate of innovation, as well as read about trends from the White House, Bank of America and other sources here. Also, we appreciated the opportunity to speak in the Festo, Gardner Business Publications, GF Machining Solutions and Parlec booths.

Walmart Manufacturing Summit Jumpstarts Further Large Scale Reshoring

The Reshoring Initiative was present to help companies that are reshoring and selling to Walmart. We met over a hundred companies and economic development organizations (EDOs). We help the companies with TCO and motivate the EDOs to implement our Reshoring Economic Development plan. See highlights, full Summit presentation and reshored companies with current job count on our Walmart Reshoring Update blog. We project Walmart’s $50 billion/year increase in U.S. product purchases by 2022 will add 300,000 U.S. manufacturing jobs.

Glenn Marshall (left) of AME and Harry Moser (right) presenting an AME award to Mark Espinoza (center) of Walmart Corporate Affairs for holding the Walmart 2014 Manufacturing Summit.

At the Walmart Summit, IDEAL Fastener Corporation came on board as our newest sponsor. IDEAL is the second largest zipper manufacturer in the world. Originally formed in New York, New York, this global company has reshored one factory to North Carolina to serve the US market. Thanks IDEAL!

In the last two months, four large national companies have approached the Reshoring Initiative for advice on whether and how to reshore. Walmart's search for U.S. manufactured products drove most of these. Other companies are encouraged to call for help as well!

Other Reshoring Initiative Activities

- Documentaries will feature the Reshoring Initiative and air in October on the French Public Television network and January on BBC World.

Interviews with French Public TV: visit to Industrial Mold Group, a leading injection mold maker in Rockford, IL (left); visit to Norton's, a Barrington, IL store selling only made in U.S. products (right)

- Other interviews included Bank of America; Plante & Moran (the auditing and consulting firm); The Wall Street Journal, L'Usine Novelle (French equivalent of Business Week); NASA; and WATR1320 radio in CT.

- Quoted by Steve Ezell of ITIF at the U.S. Senate Finance Committee hearing on “The Role of Trade and Technology in 21st Century Manufacturing”

- Spoke at a U.S. Senate Democratic Policy and Communications Center press conference on a reshoring bill: Senate 2569

Articles on Reshoring

The Reshoring Initiative published or was quoted in over 20 articles since the last newsletter. See the complete list in News. 212 new articles were added to the Reshoring Library.

Three graduate theses on reshoring were posted on Reshorenow.org:
- The Impact of Government Policies on Reshoring Efforts - Wael Sedky
- The Effect of Reshoring on Wage Inequality In the United States: A theoretical assessment - Nikie Knoben
- Reshoring - Ferran Cabratosa

Also in the News

- ACE (Access Costs Everywhere) Tool at the Department of Commerce now includes the Cost Differential Frontier (CDF), a new tool from Prof. de Treville of the University of Lausanne. CDF provides a simple means for estimating the impact of offshoring on excess inventory, unmet demand and obsolescence costs. For some products these costs, alone, can amount to 20% of the ex-works price for a product. The Reshoring Initiative is cooperating on the launch of CDF and will incorporate the output of the tool into the Total Cost of Ownership Estimator™.

Recently Reported Case Studies

Company Product
Eagle Tool US, LLC Cable installer drill bits
Universal Plastics - Kept from Offshoring - Exports to China Plastics and Rubber Products
Ticket Management System Lottery Ticket Scanner App
U.S. Ski Pole Company Ski Poles
Conveyorized Solutions Conveyors 

Have a story to tell? Submit your reshoring success story at reshorenow.org/resources.

Reshoring Resources

As always, thanks for your support.

Harry MoserReshoring Initiative (847) 726-2975

Millar Kelley – Newsletter Editor and Research Analyst

Join our mailing list.

A special thanks to the Reshoring Initiative Sponsors

All reshoring successes depend on actions. Please consider posting a link to the Reshoring Initiative on your website, and/or donating your time, talent or dollars. You can download our logo at the website. Contact us for more information on how you can help or how the Initiative can help you.


Wednesday, October 15, 2014

Survey Cites American-Made as Important Buying Factor

It is no secret that the last decade has brought a surge in demand for products made in the USA. But it was only recently we realized how much the “Buy American” movement has evolved.

In a recent survey conducted by American Certified, 1500 people across the nation were asked the question, “Other than price/ quality, what factor is most important to you when purchasing a product?”

Of the 1500 people surveyed, an overwhelming majority of respondents (51.9%) chose “Made in the USA”. The second most important factor was “Locally-made,” with 17% of participants choosing this option. The other choices included in this survey (listed in decreasing order of importance to participants) were Eco-Friendly, Union-made, Other, Veteran-owned, and Woman or Minority-owned businesses.

Saturday, October 11, 2014

A Myriad of Reports Demonstrate U.S. Manufacturing Growth

Chart(s) of the Week: American Manufacturing is Growing Stronger Every Day, White House

Made in the U.S. Manufacturing makes a returnBank of America Merrill Lynch White Paper

MAKING IN AMERICA: U.S. Manufacturing Entrepreneurship and Innovation, The Office of the President Summarized below:

Since the end of the recession, U.S. manufacturing is once again on the upswing and plays an outsized role in supporting and driving American innovation.

· Manufacturing represents 12 percent of U.S. GDP, but it contributes 60% of all U.S. research and development employees, 75% of U.S. private sector research and development, and the vast majority of all patents issued in the United States.

· U.S. manufacturing firms are more innovative, on average, innovating at more than twice the rate of other U.S. businesses – with over 30% reporting an innovation between 2008 and 2010 alone compared to only 13% for other U.S. businesses.

· Firms are increasingly reconnecting production with development and design because the iterative innovation cycle of engineering and production on the shop floor is responsible for a range of breakthrough technologies.

U.S. manufacturing is more competitive than it has been in decades:

· Manufacturing output has increased 30% since the end of the recession. The U.S. has added 646,000 manufacturing jobs since February 2010, with the sector expanding employment at its fastest rate in nearly two decades.

· There are signs that this expansion in manufacturing could accelerate. Average annual weekly hours for production workers in the manufacturing sector have climbed to 42.1, the highest level since 1945.

· In addition, manufacturing supports millions of additional jobs across its supply chain and in the communities in which it locates.

· Global executives surveyed by AT Kearney across all industries and geographies ranked the U.S. #1 as the destination for business investment, the first time that the US occupied the #1 spot in the survey since 2001.

· 54% of U.S.-based manufacturers surveyed by The Boston Consulting Group are actively considering bringing production back from China to the United States, up from 37% only 18 months prior.

· The U.S. workforce is among the most skilled and productive globally – more than 30 percent more productive than Germany’s and nearly twice as productive as South Korea’s.

· With a century of reserves, natural gas costs one third as much here as it does in Asia and our low energy costs overall are estimated to save U.S. manufacturers nearly $130 billion annually compared to Europe.

· Locating in the United States provides unparalleled access to the largest consumer market in the world and rapid access to global markets, with the United States having free trade agreements with 20 other countries and the most rapid export clearances of the 185 countries surveyed by the World Bank.

· The United States is also the global leader in patents, producing nearly 30 percent of all patents worldwide, and has 15 of the top 25 leading research universities.

New technologies are creating a new source of advantage for U.S. manufacturing:

· Access to new technologies for rapid prototyping – from laser cutters to CNC routers to 3D printers – is inspiring a new movement of Makers, inventors, and entrepreneurs. The ability to rapidly and affordably test and customize places a premium on locating close to American markets and opens new doors to entrepreneurship and innovation in manufacturing.

· Additive manufacturing, also known as 3D printing and scanning, can reduce the cost of designing and prototyping automobile components by as much as 99%

· Do-It-Yourself (DIY) electronics kits and low-cost microcontroller sets, like those produced by Arduino, Sparkfun or Adafruit, can power complex electronic gadgets ranging from cell phones to satellites. The number of Arduino boards sold more than doubled between 2011 and 2013 to over 700,000 boards.

· The nation’s historic strengths in software (the U.S. produces 80%) and digital design are positioning it to lead in an era of connected devices and of products that are digitally designed, tested, and assembled before taking final form on the shop floor.

· The rapid development cycles and reduced costs enabled by these tools make it even more attractive to locate near the United States’ large domestic market in order to meet changing consumer tastes. Wal-Mart credits this proximity to its customers for part of its decision to bring back $50 billion in production to the United States.

Existing manufacturers have accelerated investment in research and development while the rate of growth for entrepreneurs is at its fastest pace in over 20 years.

· Already globally the largest source of manufacturing R&D, the R&D intensity of U.S. manufacturing since 2003 has grown faster than that of any other country save South Korea, growing from 8% to nearly 11%.

· The United States invests twice as much as any other nation in research and development. Manufacturing R&D investment in the U.S. is now at an all-time high at $202 billion, or 75% of total U.S. private sector R&D.

· The precision machining industry grew its investment in U.S. R&D by 48% or nearly $5B between 2010 and 2011 alone.

· Established manufacturers, such as Ford and GE, are taking advantage of new technologies like rapid prototyping networks to develop new products. Ford has partnered with TechShop and increased patenting by 50%. GE is sourcing new designs and ideas from Local Motors’ Microfactories.

Entrepreneurs are starting new manufacturing firms at fastest rate in two decades:

· For the first time since 1999, the number of manufacturing establishments is growing, with more than 1,400 new establishments opening in 2013. This expansion is widely spread across 19 out of 21 major manufacturing industries.

· At the end of 2011, the growth rate of new firm creation in manufacturing, a leading indicator of entrepreneurship, reached its highest levels since 1993, growing 6% year over year.

· Rapid prototyping networks are providing platforms for new entrepreneurship.

· A national movement is brewing of Makers, tinkerers, and inventors who are scaling up from DIY to Made in the USA through networks and platforms like Etsy, Tindie, Indeigogo, Quirky, Grommet, and Kickstarter.

The Administration is laying the foundation for a revitalization of American manufacturing, shoring up the central pillar of America’s innovation enterprise.

· The Administration has increased federal investment in manufacturing R&D by 35% from $1.4B in 2011 to $1.9B in 2014.

· Through the National Network for Manufacturing Innovation, the Administration is bringing together private industry, leading universities, and federal agencies to co-invest in emerging technologies like additive manufacturing, lightweight materials, next-generation power electronics, and digital design and fabrication.

· The Administration has made strengthening and expanding the Manufacturing Extension Partnership a core priority. The MEP is a nationwide system of centers in every state, and engages over 30,000 small and medium manufacturers annually to overcome the challenges faced by firms in the commercialization of the latest technologies.

Through these investments and a continued focus on strengthening domestic production, the Administration is laying the foundation for a revitalization of American manufacturing, shoring up the central pillar of America’s innovation enterprise.
Other good sources of data on the growth of the US manufacturing sector include:

Friday, October 10, 2014

Walmart Reshoring Update

Walmart’s role as a driving force is becoming clear, creating a focused business opportunity for many U.S. manufacturers: consumer product companies directly and their industrial suppliers indirectly. Walmart’s reshoring commitment dwarfs that of any other U.S. company. In the 10th year of its program Walmart will be buying $50 billion more U.S. products per year, generating, by our estimate, about 300,000 additional manufacturing jobs (by Boston Consulting Group’s estimate,1,000,000 total jobs). So far, 26 companies have been officially announced in the program, generating 3654 known direct jobs. See chart below for details. 

Walmart U.S. supplier
Jobs added

Injection-molded footwear in Hazlehurst, GA
Louis Hornick & Company
Window covering and home textiles in a new facility in Allendale County, SC

Tuesday, October 7, 2014

Can Government Incentives Drive Reshoring? Graduate Wael Sedky Asks the Question

The Reshoring Initiative is pleased to publish an MBA Dissertation from Wael Sedky of the University of Wales, The Impact of Government Policies on Reshoring Efforts. Mr. Sedky's research surveys companies to determine what the driving factors behind their reshoring efforts are, and to determine whether or not government policies have or could have a strong role in influencing supply chain decisions.

While Mr. Sedky finds that current government policies do not have a strong influence on current reshoring efforts, he points out several policies -- such as tax credits and cuts, worker training and retention tax incentive programs -- that governments could enact to further encourage reshoring.

The Reshoring Initiative is pleased to publish the paper on our website, here.

Reshoring may reduce wage inequality, suggests research by Nikie Knoben

The Reshoring Initiative is pleased to publish Radboud University Nijmegen (the Netherlands) masters' candidate Nikie Knoben's thesis, THE EFFECT OF RESHORING ON WAGE INEQUALITY IN THE UNITED STATES: A theoretical assessment.

Ms. Knoben's paper offers a comparative investigation of three theoretical models to assess whether the reshoring of production and jobs will bring a decrease in the wage gap. She looks at globalization as a driver of wage inequality in this country, and speculates on how the reversal of this trend could, in turn, reduce wage inequality. Her models depict mixed results on wage from reshoring's impact, but in general she concludes that it is possible for reshoring to decrease the wage gap.

Read the full thesis here.

Friday, September 12, 2014

Festo brings much-needed German-style skills training to the U.S.

According to Georgetown labor economist Anthony Carnevale (via the Wall Street Journal), “two million U.S. jobs go unfilled because of shortfalls in skills, training or education.” One German company, Festo, thinks it has the solution: a German-style vocational program that will apprentice students and young professionals to train them in what employers and jobs require for successful careers.