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What Can We Do Together to Boost Reshoring?

 Harry Moser

 

 

 

 

  

 

 

   By Harry Moser
Founder and President
Reshoring Initiative
harry.moser@reshorenow.org

 
US manufacturing could be doing much better and SME and the Reshoring Initiative can play a key role in making that happen by driving reshoring and FDI (Foreign Direct Investment). Manufacturing employment is up 900,000 from the low in 2010 but down almost 5 million since 2000. At least half of that total decline is due to the offshoring of manufacturing jobs. And while the rate of awarding skilled workforce certificates has been rising by more than 20% per year for the last 10 years, we still have an estimated 600,000 unfilled manufacturing jobs.

Today, reshoring and FDI are bringing back about as many jobs as we are losing to offshoring each year, but our trade deficit is still around $500 billion a year, with about 4 million manufacturing jobs offshored. Balancing the trade deficit would increase US manufacturing by about 30%.

In the current economic and trade environment, the key to accelerating reshoring is to convince companies to reevaluate their offshoring, using a tool like the Reshoring Initiative’s Total Cost of Ownership (TCO) Estimator to quantify the hidden costs that 60% of companies ignore when they make decisions based mainly on ex-works price. Use of TCO typically closes the price gap between domestic and offshore sourcing by 15–30% of price. User data suggests that about 25% of what is now offshored would be reshored if companies switched from price to TCO consideration.

Here are some ideas for how SME, SME members and the Reshoring Initiative can accelerate the manufacturing renaissance via reshoring and FDI:

    1. When you learn about cases of reshoring, share them with each other and SME’s media group. Especially cases enabled by what companies learned via SME: lean, automation, etc.

    2. When attending trade shows, exhibitors should highlight reshoring successes achieved with the exhibitor’s technologies. Invite the media to cover the successes.

    3. If you belong to an SME Chapter, schedule a meeting presentation on reshoring. The Reshoring Initiative can provide a presentation and speak live via webinar, Skype or telephone. Supplement with chapter members describing their reshoring successes or opportunities. Members invite local OEM customers to learn about TCO for sourcing decisions. Convince the local media to report on reshoring cases.

    4. Encourage your employers to reevaluate offshoring using TCO. When you are making purchasing decisions, ask where the product is made and what American made options are available. Use TCO as a sales tool to convince customers to buy from your company instead of buying imports.

    5. The biggest skilled workforce problem is recruitment, aggravated by the perception that manufacturing is a poor career choice. Help promote manufacturing as a high-tech career option and also highlight reshoring successes so that parents and guidance counselors can honestly encourage students to consider manufacturing careers.


Visit the Reshoring Initiative online to see what other tools you can use to help grow US manufacturing:

  • Try our Total Cost of Ownership (TCO) Estimator.
  • Reshoring Library. 3000+ linked articles. See what your competitors are reshoring.
  • Case Studies. Submit your reshoring success story. All valid cases will be posted, and we will send the submitter a “Manufacturing is Cool” T-shirt.
  • Economic Development Program. Strengthen your region and your sales by replacing imports with local production.
  • Skilled Workforce Development program.
  • Resources for retail suppliers that help them pick the right products to reshore, improve their cost competitiveness, find component suppliers, and more.

 

This article was first published in the April 2016 edition of Manufacturing Engineering magazine. Read "What Can We Do Together to Boost Reshoring?" as a PDF.


Published Date : 4/1/2016

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