Reshoring Initiative Winter 2013 Newsletter

Reshoring Initiative to Help Mississippi Reshore

The Reshoring Initiative is a partner with Mississippi State University in a $1.9 million award from the Make it in America Challenge, a $20.5 million federal fund to promote reshoring, job creation, and training. We will be speaking, consulting and training on reshoring and skilled workforce development. The MSU grant will be used to:

• Link small manufacturers into the supply chains of larger manufacturers.
• Engage more than 100 advanced manufacturers to prioritize reshoring and other related supply chain opportunities.
• Promote private and foreign investment, job creation and retention.
• With cooperating advanced manufacturers, establish an internship program that will fund 276 internships with a targeted 85 percent placement rate.

Why the World’s Largest Manufacturer of Musical Instrument Accessories Elevated its Domestic Manufacturing to 95%—and Plans to Keep Going

When asked why D’Addario & Co, the world’s largest manufacturer of guitar strings and other musical instrument accessories, is always searching for new reshoring opportunities, its president, John D’Addario III, can quickly pull from a seemingly bottomless supply of reasons.

“Rising labor costs in Asian factories, freight costs…I could go on and on,” remarked Mr. D’Addario. But his reasons for reshoring extend far beyond the typical glut of offshoring issues. When offshoring problems combine to form complex and costly multi-layered challenges, reshoring often provides the most elegant and effective solutions.

Reshoring in the Netherlands

Bringing back production from China

A lot of companies once offshored their production to countries with low wages like China. Today, there is a movement going against this offschoring. “Bring back production jobs and help the disabled on the labour market” says labourmarket specialist Martin Verduyn.

Reshoring Initiative September Newsletter

We are Looking for Partners

The Reshoring Initiative is looking for partners to help in the following areas:

• Additive Manufacturing – We are looking for cases of companies that have used additive manufacturing (3D printing) to produce reshored parts. OEMs and contract manufacturers are both encouraged to submit their cases. Please submit your case study online. 

• U.S. Politicians – We are seeking the support and involvement from both political parties to help spread the word and make the United States the best country for manufacturing. A broad range of politicians' offices have already contacted us, including: Senators Durbin (IL) and Gillibrand (NY), Congressman Schneider (IL), and Chicago Mayor Rahm Emanuel. If you have connections with any U.S. Representatives or Senators that might be interested, please send them to us at info@reshorenow.org.

Walmart's U.S. Manufacturing Summit

I attended Walmart’s U.S. Mfg. Summit August 22 and 23 in Orlando. There were fifteen hundred attendees included senior managers from 500 Walmart suppliers. Presenters included Jeff Immelt, U.S. Secretary of Commerce Pritzker and 9 governors. I came away convinced that Walmart is doing everything it can to dramatically increase its purchases of U.S. manufactured products.  I met dozens of companies that are doing their best to provide a U.S. made product at a price and quality that U.S. consumers will find acceptable and choose vs. imported products.

Reshoring Initiative July Newsletter

First Major Cell Phone Production Returns to the U.S.

Motorola Mobility, which is owned by Google, is opening a factory in Fort Worth, Texas. The company plans to manufacture its top-of-the-line Moto X cell phone at the facility, which was previously used to produce Nokia cell phones. Motorola will employ 2,000 workers at the Fort Worth factory. The company cites lean practice, proximity to customers, R & D and consumer preference for Made in U.S. as the main reasons for bringing manufacturing back to the U.S.

Consumers Prefer Made in USA Products

The Boston Consulting Group and other researchers recently reported that consumer preference for Made in USA products continues to increase. Here is a sampling of the results:

• About two-thirds of U.S. consumers are willing to pay a premium for 10 key product categories that were tested—from baby food and appliances to electronics and apparel.
• The premium consumers are willing to pay varies, ranging from about 10 percent to more than 60 percent in the categories tested.
• In all of the 10 categories, at least 20 percent of U.S. consumers are willing to pay a premium of more than 10 percent.
• Nearly 60 percent of U.S. consumers chose Made in USA products over less expensive Chinese goods at least once in the month before the survey.

As consumers increasingly put their preferences into action, retailers need to make it easy to find Made in USA products, and manufacturers need to use Total Cost of Ownership to understand how they can competitively offer a broad range of U.S. products.

"Voters See Manufacturing as the 'irreplaceable core of a strong economy'" – American Alliance of Manufacturing


"That 'Made in USA' Label May Be Worth More Than You Think" – The Boston Consulting Group

"Born in the USA OR Coming to America: Harris Poll Finds Buying American Still Valued in Increasingly Global Marketplace" – Harris Poll

Reshoring Initiative Meets Clinton Global Initiative (CGI)

The Reshoring Initiative was a member of the Manufacturing Group at the third annual meeting of CGI America, which took place June 13 - 14 in Chicago, IL. As part of the two-day meeting, several high-profile celebrities spoke, including President Bill Clinton, Hillary Rodham Clinton and Chelsea Clinton. As a participant in the Manufacturing Group, Harry Moser proposed finding one or more large companies to partner with the Reshoring Initiative. As partners, companies would actively use the Total Cost of Ownership (TCO) Estimator™ when making sourcing decisions about offshore vs. domestic. These companies would then provide a reference to help motivate other companies to do likewise.

Companies interested in understanding their offshore and domestic costs more accurately by becoming a partner are invited to e-mail harry.moser@reshorenow.org.

Support the Reshoring Initiative and Reshoring

There are multiple ways you can get involved and become part of the reshoring movement. Here are just a few ideas:

• Use the TCO Estimator for sourcing decisions and selling against offshore competitors.
• Invite the Reshoring Initiative to address your or your customers' industries at a speaking engagement or meeting.
• Post a link to the Reshoring Initiative on your website.
• Donate your time, talent or dollars to the Reshoring Initiative.

We need your support to make reshoring more than a trend. Contact us for more information on how you can help.

Upcoming 2013 Events

• August 8 – AME/TRI-ED – Mazak Corporation, Florence, KY
• September 8-11 – Material Handling and Logistics Conference – Park City, UT
• September 18 – CTMA 2013 Annual General Meeting & Dinner – Ingersoll, Ontario, Canada
• September 24-26 – IPC Technology Market Research Conference – Chicago, IL
• October 6-9 – IEDC Annual Conference – Philadelphia, PA
• October 7-10 – ERA's 46th Management & Marketing Conference - Oak Brook, IL
• October 7-9 – Commodity/PROcurement EDGE Conference – Chicago, IL
• October 10 – 11th Governor's Advanced Manufacturing Summit – Manchester, NH
• October 8-16 –  Discover 2013: Technology and Education Event – Mazak - Florence, KY

A complete list of upcoming Reshoring Initiative appearances can be found on the Upcoming Events page.

What's Coming Up

• Updates to the Reshoring Initiative website
• Improvements to the TCO Estimator
• Inclusion of a reshoring chapter in AAM's upcoming book, ReMaking America
• Completely renovated and improved Reshoring Library

When it comes to the manufacturing industry in North America, you can be part of the problem or part of the solution. The United States has contributed many of the world's greatest innovations and created long-standing wealth for generations. Now it is on the verge of a huge comeback. The Reshoring Initiative, its partners and supporters will be part of that comeback. Will you?

As always, thanks for your support.


- 
Harry Moser

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Reshoring Initiative meets Clinton Global Initiative (CGI)

CGI America, which took place June 13 and - 14 in Chicago, IL, brought together approximately 1,000 representatives of business, government, foundations and non-governmental organizations to find “solutions that promote economic recovery in the United States.”

CGI was a great event to experience, and it brought like-minded individuals together to work on many actions relevant to the Reshoring Initiative and, of course, to the country.

I represented the Reshoring Initiative at the two-day event and participated in the Manufacturing Working Group. My group time was split between the skilled workforce and small-and medium-sized manufacturers sub-groups.

It was a privilege to hear the event’s speakers including Bill, Hillary Rodham and Chelsea Clinton. I also heard from Jack Lew, Treasury Secretary; Chris Christie, New Jersey Governor; and a range of national corporate and not-for-profit leaders.

However, the best value for me was the networking. I left the event with 50 business cards and 20 follow-up calls to make.  Valuable follow-ups included: company, foundations, and trade association leaders. I also was lucky enough to rub elbows with mayors, New York U.S. Senator Kirsten Gillibrand’s staff; a senior UAW leader; and professors from MIT and Rensselaer.

And, other event attendees were consistently impressed by the work of the Reshoring Initiative.

CGI participants are expected to work with several partners to develop an initiative/action that achieves measurable goals consistent with CGI’s overall mission.

My initiative is to find one or more large companies that will partner with us. Partners will thoroughly test the Reshoring Initiative’s Total Cost of Ownership (TCO) Estimator™ for making decisions about offshore vs. domestic sources. These partners would then provide a reference to help motivate other companies to do likewise.

I have already identified one large company that I hope will become our first partner.

Other companies interested in partnering with the Reshoring Initiative to compare offshore and domestic costs more accurately, are invited to e-mail harry.moser@reshorenow.org.

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 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.

Join our mailing list here.

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.

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 Columbian 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 labor 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.

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.