Tuesday, May 7, 2013

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.