Economic Development Program
The Reshoring Initiative provides tools and information directly to manufacturers to help them make better sourcing and siting decisions. In addition the Reshoring Initiative offers programs to help economic development organizations, Manufacturing Extension Partnerships, universities, community colleges and other organizations work with their local manufacturers to bring back offshored work and develop a skilled workforce, thus strengthening the local community.
Our focused reshoring program is high impact with minimal cost. It gives groups specific actions they can implement in their communities that will help identify opportunities for work that can be reshored, educate importing companies about the benefits of reshoring, and close any cost gaps that may prevent work from being reshored. Currently, this program is being used in Pennsylvania, Mississippi and central New York State.
Contact us to learn more about developing this opportunity in your area.
Focused Reshoring Program:
1. Use the Datamyne database to identify all ocean freight imports by all regional companies, generally OEMs.
2. Decide which imports are, in aggregate, in large volume and could be economically produced in the region: either in-house or by suppliers (generally SMEs). For example:
• Exclude: produce that cannot be grown locally; items that are intrinsically too labor-intense, e.g. hand painted Christmas tree ornaments; minerals that cannot be found locally.
• Emphasize: products for which the region has the required suppliers or skilled labor, even if not in excess.
3. Use your team and other interested parties to contact the importers. For example, include local suppliers of capital equipment, industrial supplies, components, etc. These groups have teams in the field, know the manufacturers and will benefit strongly from reshoring
4. Ask the importers to consider producing or sourcing locally what they now import. The importers will say they do not produce or source locally because prices are much lower (often 30%) offshore. They might also mention taxes, regulations, etc.
5. Educate the involved importers with the Reshoring Initiative’s free Total Cost of Ownership (TCO) Estimator to reevaluate offshoring vs. reshoring. For example:
• The Initiative trains the Economic Development Organization’s field staff to discuss reshoring with the importer and trains a few staff to be the local experts. The local experts call on the Initiative for help if needed.
• The Initiative presents at Reshoring Summits to engage the importers and suppliers and visits key importers to accelerate the process.
6. Help the importers see that there is often no or only a small TCO difference with local production or sourcing.
7. If the importer has lost the knowledge required to produce the products, assemble a team to help them redevelop that knowledge. (See 8 below.)
8. For work that the importer decides to outsource domestically, introduce the importer to local suppliers or bring importers and suppliers together in a Purchasing Fair to start the shift of work from offshore. Our user data suggests that about 25% of offshored work would come back if TCO, instead of purchase price, is consistently used to make sourcing and siting decisions.
9. Identify any remaining TCO gaps vs. offshore. To close remaining small gaps, utilize a team, as needed:
• Automation: e.g. machine tool and automation distributors and producers
• Workforce technology skills training: technology providers and distributors, trade associations, community colleges
• Lean and other process improvements: MEPs, AME (Association for Manufacturing Excellence), universities, etc.
• Economic Development assistance: EDOs.
10. Recruit new facilities by other U.S. companies or FDI (Foreign Direct Investment) to fill large regional supply gaps.
11. Using the TCO software, forecast when additional work would be reshorable based on forecast increases in foreign labor costs. Follow-up accordingly.
12. Develop tools to help the importers decide to reshore:
• Lists of regional or state companies that have successfully reshored.
• Lists of suppliers, including those to whom importers have reshored sourcing.
• TCO/Reshoring Initiative.
• Lists of resources to help reduce Total Cost at importer or supplier.
• U.S. Dept of Commerce’s online ACE Tool.
• Free publicity, if wanted.
· Strengthens your state and the country as work comes back from offshore rather than from neighboring states.
· Minimal incentives, since the work comes back in the self-interest of the involved companies.
· Strengthens local ecosystems around OEMs to make them more successful and more firmly linked to the region.
· Helps you focus on reshoring, the substitution of local production for imports. U.S. production is about 30% more competitive here than offshore.
· Feeds the skilled workforce program by making local reshoring visible to the community, affirming that manufacturing is a strong long-term career choice
Contact us today to make your region the model for the rest of the country.