Trade Deficit: Imports or Exports: Where Should We Focus?

Should We Focus More on Reducing Imports or Increasing Exports?

We often hear of the need to increase U.S. exports, thus increasing GDP, employment and tax revenues and reducing foreign debt. Actually, the country needs to reduce its net export deficit. Due to the approximately 30% cost advantage of competing domestically instead of overseas, the relative volumes of our annual imports and exports, and a range of exogenous impacts on the U.S. economy, it is almost surely in the country’s interest to place more emphasis on substituting domestic production for imports (reshoring) than on increasing exports. Despite the clear advantage of reshoring, the U.S. government spends about 60X more on promoting exports than on encouraging reshoring.

Reshoring News: ABC Nightline video highlights Walmart's call for American Invention and Reshoring!

Walmart is the world’s biggest reshorer with a commitment to buy an additional $250 billion of U.S. products over the next 10 years.  This video shows a recent call for new U.S. products.  This effort will produce about 300,000 U.S. manufacturing jobs and lots of happy inventors and small business owners.

Check out all the hustle and bustle:

ABC News | More ABC News Videos

Also see more on Walmart's MADE IN USA - OPEN CALL

"Social Reshoring" is a Win-Win with TCO

Labor costs are still higher in the U.S. than they are in China, but this is not the only piece of the puzzle manufacturers are using these days to determine whether to offshore or reshore production. Thanks to total cost of ownership (TCO) calculations, manufacturers are realizing that sacrificing a little in labor costs can be worth a lot in total cost. Higher productivity, quality, and ease of redesign combined with shorter lead times and lower freight and inventory costs are more than worth the margin on American labor. Many manufacturers are seeing that using TCO can increase profit margins as well as economic and commercial welfare in their communities.

According to one strategist, Thorsten Hoins, in a post titled “Consider Social Reshoring,” what many manufacturers may not be capitalizing on is their ability to improve social welfare by creating jobs where they might not previously have existed—and, yes, still remain cost-competitive. FVO Solutions, a provider of U.S.-based manufacturing and third party logistics services for private and public firms, maintains cost-competitiveness and provides socially-conscious Made in USA goods and services in one fell swoop. Their coup de grâce is that they “provide employment opportunities that would otherwise not exist”: operating as a not-for-profit, they practice what Hoins calls “social reshoring". In his definition, social reshoring is “[t]he practice of bringing outsourced labor back to the location from which they were originally offshored and create price competitive jobs in our own communities: for veterans, wounded warriors, at-risk youth, people with disabilities and others with barriers to employment.”

He suggests that by implementing social reshoring, manufacturers can bring jobs back to all Americans while increasing profitability and competitiveness: it's a win-win.

See Thorstein Hoins' full post here.

Is your company using a TCO model for sourcing decisions? Try the free Total Cost of Ownership Estimator.

Reshoring IT Hardware Leads to TCO Cost Savings and Risk Avoidance

A recent post on Planet Magpie, an IT blog, asks the seemingly-simple but surprisingly-complicated question, “where did your computers come from?” And perhaps more importantly, why should you care?