Local and Federal Governments Support Reshoring

The Commerce Department Launches Assess Costs Everywhere (ACE)

On April 9, the Commerce Department introduced ACE  - a useful and informative tool for comparing costs and risks of offshoring to those of domestic sourcing. As part of this endeavor, The Commerce Department accumulated data on a wide variety of risks, travel and shipping costs and other factors helpful for calculating Total Cost of Ownership. The Reshoring Initiative played a role in the development of the site’s concept, and is present on the site’s Toolbox. It is estimated that companies would reshore 25% of offshored work if they calculated their total cost. Rising offshore wages, plus other “hidden” costs are increasingly diminishing any savings from price and labor. Total cost tools make it possible for companies to recognize when local sourcing is the more profitable option.

Ohio House Passes Legislation to Designate March "Reshoring Month"

Ohio State Senator Bill Beagle led the effort to make March 2013 Reshoring Month in Ohio. This reshoring proclamation is the first by any state. Congratulations, Ohio!

The Bring Jobs Home Act

West Virginia Senator Jay Rockefeller cosponsored a bill to encourage American businesses to stop moving jobs overseas, and incentivize them to bring those jobs back home and hire American workers. While all efforts to support reshoring are appreciated, in general the preferred solution is to eliminate all special exemptions and deductions to keep tax codes simple and reduce corporate tax rates across the board so that all manufacturing is motivated to produce in the U.S.

Many State governments continue to offer tax, credit and grant incentives to companies that create jobs in their areas. According to a recent Reshoring Report by the MIT Forum for Supply Chain Innovation, “the number one government action that can make a difference is corporate tax reductions, with both providing tax credits and R&D incentives coming in second.” To find out more about existing government incentives, contact your local Manufacturing Extension Partnership or Economic Development Organization.

Tell us how government incentives helped you reshore on the Case Studies feature on our website.

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Next Up: Industry Focus of R&D, and profitability of Made in the USA branding.

Reshoring Movement Prevails In Economist Outsourcing Debate

by Harry Moser, founder of The Reshoring Initiative, www.reshorenow.org.

 The past few months have been full of publicity surrounding U.S. manufacturing and reshoring. With the increased interest in both, The Reshoring Initiative has been present in many prestigious media outlets including Forbes and MIT Technology Review. Most notably, I recently participated in an Economist debate, which highlighted the strong support of the Reshoring Initiative’s mission.

 The online debate, which took place over nine days, pitted Columbia University Professor of Economics and Law Jagdish Bhaqawati against me. As a representative of reshoring efforts, I defended the motion, “Do multinational corporations have a duty to maintain a strong presence in their home countries,” while Professor Bhagawati debated against the motion. All arguments and reader participation was moderated by Tamzin Booth, Economist European business correspondent.

Despite the clear commitment of most Economist readers to globalization, I held a first-day lead with 58% of the vote. In my opening statement, I defined “strong presence” as investing, employing, manufacturing and sourcing at least in proportion to a company’s sales in the home country. Far too often, I have observed multinational corporations place excessive focus on the offshoring of manufacturing jobs. By deciding what to offshore based on labour rates, ex-works price or landed cost rather than on total cost of ownership, multinational corporations are making uninformed decisions. Preliminary data from users of the Reshoring Initiative’s free Total Cost of Ownership Estimator™ supports this conclusion. As much as 25% of what has been offshored would come back with higher profitability if the correct metrics were used. In reality, decisions are made that reduce the short and long-term return for the company, their shareholders and employees, as well as their home country.

 But, as in any debate, a lead is never safe and the vote quickly swung in favor of Professor Bhagawati on days four thru seven. Professor Bhagawati maintained that home countries benefit no matter where the production or R&D is done because profits inevitably come back to the home country. However, he agreed that companies should reevaluate their decisions to offshore. It was refreshing to see that a devout globalization and Ricardian economics defender could not disagree with the base of the Reshoring Initiative’s mission.

I believe much of the late surge of support that ended up giving me the 54% victory can be attributed to the continual agreement on this point. With roughly 50,000 manufacturing jobs reshored since January 2010, the debate win reveals solidarity among manufacturers, employees, machine tool builders, distributors, trade and policy associations, progressive and fair trade groups, unions and Made in USA companies.

 The majority of companies ignore 20% or more of the total cost when making sourcing decisions. When multinational corporations do not see past a low labor rate or direct price, they can incur a much higher total cost. It is imperative for companies to make better-informed investment and sourcing decision: offshore vs. home and long-term vs. short-term.

 Special thanks to the Economist for allowing me to participate, Professor Bhagawati for his time and thoughtful arguments, and Tamzin Booth for her fair and thorough moderating. Also, thank you to all those who supported me in the debate.

 A copy of the debate in its entirety is still available online at: http://www.economist.com/debate/overview/245.

Inaugural Reshoring Summit – Manufacturing Networking at its Finest

by Harry Moser, founder of The Reshoring Initiative

Next week is sure to be exciting for the manufacturing community as key reshoring leaders and U.S. manufacturing stakeholders gather in Cleveland, Ohio for the inaugural Reshoring Summit: Bringing Manufacturing Back to the U.S. Presented by Infocast, the event will take place at the Cleveland Marriott Downtown in the Key Center March 12-14.

Being the first national event of its kind, The Reshoring Summit will focus solely on the issues surrounding the reshoring movement and serve as a unique opportunity for manufacturers to discover the benefits of making better sourcing decisions. Over the three days, we (the reshoring community) will engage in discussions with manufacturers, suppliers, governmental development organizations, site selectors and others in attendance. The event will also serve as a platform for building valuable relationships and learning how to sell against offshore competitors while attracting, obtaining and retaining companies to their regions.

As part of the educational sessions, case study reviews and interactive panels, I will deliver the opening day presentation on establishing the proper procedures when considering reshoring. The two-hour session will take a closer look at what factors companies must evaluate when making manufacturing and sourcing decisions. One factor that is frequently overlooked is the total cost of offshoring, easily done with our free Total Cost of Ownership Estimator™. The presentation will also cover the cost components necessary for determining accurate financial scenarios – many of which are ignored when making sourcing and investing decisions.

Other Reshoring Summit faculty and distinguished reshoring colleagues include Walter Snodell, Tobais Schoenherr, Hope Paolini, Scott Paul and Kristi Tanner. For more information and to register, please visit: www.infocastinc.com/reshoring.

A U.S. Manufacturing Success Story – Simple Wave LLC

by Harry Moser, founder and president of The Reshoring Initiative, www.reshorenow.org.

This past year, focus on the loss of U.S. manufacturing jobs due to offshoring (sending jobs overseas) has intensified. In the rhetoric surrounding offshoring, all too often we hear stories of individuals losing their jobs to the “lower” cost of production. I have worked to dispel this notion using analysis and data obtained by the Reshoring Initiative’s  Total Cost of Ownership Estimator™.
 

One company, SimpleWaveLLC, has embraced the shift in collective thinking from ‘offshoring is cheaper’ to ‘local reduces the total cost of ownership.’ In doing so, the California-based company received the 2012 U.S. Department of Commerce’s Export Achievement Award during a ceremony at NPE - a chemicals trade show and event organized by The Society of the Plastics Industry, Inc. While presenting at the show, I had the opportunity to congratulate the Calibowl creators and thank them for their efforts toward bringing solid, well-paying manufacturing jobs back to the United States.

Simple Wave and its award-winning Calibowl, the innovative bowl featuring a patent-pending inner curving lip that moves food back into the utensil or chip, eliminating spills, is the creation of Jeff Bollengier and partner Rich Stump.  

Jeff and Rich first presented Calibowl at the 2008 LA Gift Show and were immediately featured in the “O” Favorite Things list. That led to placement in the Rachel Ray Show, QVC, the Shopping Channel, Readers Digest, Canada Homestyle Magazine and many more. As they say, “The rest is history.”

Calibowl is much more than a unique solution to one of life’s many problems. Simple Wave’s brand serves as a reflection of both Jeff and Rich’s personal values. These values are then carried out in their production of Calibowls. Jeff and Rich’s dedication to the U.S. economy led them to move the manufacturing process from China to the United States.

In an April 3 interview with The Street’s Elizabeth Blackwell, Rich spoke to being a U.S. manufacturer and the demand for U.S. manufactured products. "Our customers in Korea, Canada and even China wanted U.S.-made products,“ says Stump. ”The Made-in-America brand has real value overseas…  So far, we've created a total 15 jobs in the U.S. just in manufacturing, and we expect to add a few more each month,“ says Stump.

As accounted for in the total cost of ownership, Simple Wave believes U.S. manufacturing will reduce freight cost and improve the company’s response time as well as reinforce its green image through a reduced carbon footprint. Now Calibowl is MADE in USA and is exporting to Canada, Singapore, Korea, and even China, a business practice the Reshoring Initiative and Simple Wave hope other manufacturers follow.

You can support Simple Wave, Calibowls and their reshoring initiative at BevMo!, Amazon.com, JC Penny’s, and Bed Bath & Beyond.
 
Connect with Calibowl via their website: http://calibowl.com/ and Facebook: https://www.facebook.com/calibowl, and follow them on Twitter: @CaliBowl.
 

 

Reshoring Goes to the White House

by Harry Moser

On Tuesday, Jan. 3, I received an unexpected call. It was the White House.

The Commerce Department and the White House Office of Science and Technology Policy had both recommended that I, Harry Moser, be included in the Jan. 11 Insourcing American Jobs forum at the White House. (Insourcing is also referred to as reshoring, backshoring, homeshoring, onshoring, backshoring, or repatriating.)

My first question was, would I be "attending" or "speaking"? Since they were unable to commit, the  details would have to be worked out in the coming days. I was able to rearrange my travel schedule and booked a flight to Washington D.C., which would then take me on to Massachusetts, Albany and New Jersey. Luckily, the change in travel didn't break the bank (most flights from D.C. to Albany are upwards of $700).

With only one day before the event, the White House confirmed that I would actively participate in the morning Roundtable and the afternoon panel, so the travel arrangements were a good investment!

I entered the Eisenhower Executive Office Building thru the Guest Entrance, passed security twice,  and was taken to the Roundtable room. Inside I found a great assemblage of business executives, cabinet members, presidents of major unions, the governor of Oregon, the mayor of Atlanta, administration leaders, and two other experts. We were also joined by Vice President Joe Biden and President Barack Obama. Wonderful networking!

Harry Moser, (3rd from left) shakes hands with President Obama.

President Obama entered and shook hands with each of us. He said to me, “I have a question for you.” He was perfectly scripted with questions tied to each participant’s experience and knowledge. 

The President then formally started the discussion and stayed quite non-political. Attendees responded with solid data and examples, and avoided any political controversy. After all, the focus was on what could be done.

My role was to describe the importance of businesses using total cost of ownership (TCO) analysis and the fact that the online TCO Estimator database showed that while 100% of cases had far higher U.S. prices, 60% had a lower U.S. TCO. After hearing the facts, there was strong support for the use of the TCO Estimator, instead of price variance, when deciding on sourcing and investing in skilled workforce development.


The press conference was a mix of the essential content of the Roundtable and more politically motivated comments. At the end, I told the President I would send him a good reshoring line for his State of the Union address. He encouraged me to do so. And, I sent it the next morning.

The afternoon panel was much less structured than the Roundtable and led by Karen Mills, Administrator of the SBA. I provided an overview and suggestions on what SBA could to strengthen financing and the skilled workforce in the U.S. After the day's events, the SBA senior staff followed-up with me to discuss issues and opportunities in more detail.


I was honored to be included in the Insourcing American Jobs forum. Not only was I able to provide my insights on the reshoring efforts, but also inform Americans of the resources the Reshoring Initiative provides.

I look forward to pursuing joint interests with the many contacts, and to advancing reshoring and the tightly-tied issue of skilled workforce.

Harry Moser is the founder and president of The Reshoring Initiative, www.reshorenow.org.