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Reshoring in the Media


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Reshoring Discussion

The New American Reshoring Movement by the Numbers

Cutting Tool Engineering has created an infographic to provide company decision makers with key data points about reshoring.


Reshoring has Become an Economic Development Strategy
Nash-Hoff , Michele, Industry Week, 19 May 2016

Excerpt: The reason economic development agencies have become interested in reshoring is that "The impacts of reshoring extend beyond individual companies and provide benefits for entire regions as the effects multiply through local economies."

From an economic development viewpoint, "it is important to understand that reshoring is fundamentally a location decision. In this sense, a company’s decision to stay in the U.S. or relocate will be based on its total operation costs in a given location." Read more


More on the Reshoring Trend
Heney, Paul, Design World, 9 June 2016

Excerpt: Reshoring continues to make inroads in the American manufacturing sphere. While speaking with a robotics expert recently, he remarked how the cheaper and easier-to-program industrial robots now available are bringing production costs much lower. Low enough, in fact, that in some industries, smaller manufacturers can effectively compete with the low labor cost countries overseas. Read more


Is the Reshoring of U.S. Manufacturing a Myth?
Cohen, Morris, Knowledge@Wharton, 5 May 2015

Morris Cohen, professor of operations and information management at the University of Pennsylvania, is conducting a study of sourcing and restructuring decisions that companies make when deciding to reshore their operations back to the United States. In this article, he highlights some preliminary findings from surveying many such companies. He notes that there is an unprecedented amount of restructuring occurring among manufacturing companies, that the reasons why are complex, and that the level of cost calculations being carried out is much deeper. The article says that although labor costs are being cited in the media as a main factor, labor costs are specific to the product being made and in many cases do not comprise a large percentage of the total cost of operation. Therefore, economic developers should cater their recruitment efforts to be more company-specific. For example, if a company's labor cost is a large component of its total cost, then investing in R&D and technology advances may help attract this company to your community.


Reshoring Starting to Reshape U.S. Manufacturing
Meenan, Jim, South Bend Tribune, 15 December 2014

In this article, Jim Meenan of the South Bend Tribune describes how reshoring is slowly reshaping the U.S. manufacturing sector. Meenan defines reshoring as “bringing back jobs to America that had been farmed out to foreign countries.” The article highlights Genesis Molding, which produces molding and tools, as a company that has reshored. Meenan discusses the company's reshoring experience and notes that the company was not saving on costs in the long-term while manufacturing overseas. Gensis Molding also faced challenges relating to high shipping costs, communication problems, and risk of intellectural property being stolen. In addition, the company faced quality control issues in their production overseas. U.S. economic competitiveness has increased and the CEO of Gensis Molding notes that the U.S. can compete with China in many respects. Meenan also speaks with Dorinda Heiden-Guss, the President and CEO of the Elkhart County Economic Development Corporation, who notes that the community has seen evidence of reshoring activity, which she attributes to an increase in the quality of American materials, robotics, and automation technology.


New Study from Boston Consulting Group Show Modest Increase in Reshoring Interest, but Picture Remains Unclear.
Supply Chain Digest Staff, Supply Chain Digest, 27 Oct. 2014

The Boston Consulting Group's (BCG) study on the top 25 export economies reveals dramatic shifts in cost competitiveness in the manufacturing industry. BCG indentifies increased wages, fluctuating currency values, labor productivity, and a reduction in energy costs as factors that greatly impact production costs and the reshoring decisions that manufacturing companies make. BCG also identifies intangible factors and hidden costs to offshoring that tend to be overlooked and not calculated in total cost valuations. These factors include the ability to protect intellectual property, the length of supply chains, the ability to manage operations, and the ability to ensure quality control. BCG noted countries under pressure, which traditionally have a cost advantage over the U.S., are now facing deteriorating competitiveness, including: China, Brazil, the Czech Republic, Poland, and Russia.


The Shifting Economics of Global Manufacturing
Sirkin, Harold L., Michael Zinser, and Justin Rose, Boston Consulting Group, 19 Aug. 2014

In its 2014 update, The Boston Consulting Group builds on its 2011 report by discussing the forces that are changing the "competitiveness map." The report notes that BCG created a Cost-Competitive Index, which is an interactive tool that can be accessed here. This index estimates the changes in direct manufacturing costs of 25 exporting nations from 2004 to 2014 using wages, productivity, energy costs, and currency exchange rates. Based on the report, the cost-competitiveness of China has eroded over the last 10 years, while the manufacturing cost-competitiveness of the U.S. has improved. The report also includes data for Russia, Mexico, India, Brazil, and Indonesia, among others.


Reshoring: Strong Regions Will Determine Where, How
Muro, Mark, The Brookings Institution. 02 Oct. 2014

Mark Muro, director of policy for the Metropolitan Policy Program at the Brookings Institution, suggests that the U.S must strengthen the depth of the nation's regional advanced industry ecosystems by calling on governments, companies, and individuals to work collectively to rebuild the nation's local skills pools, industrial innovation capacity, and supply chains. He notes that labor and energy costs are not as central to site decisions, but that the availability of local skills will determine the type and location of reshoring. Improving training, producing local skill-sets, and creating supply density will create a foundation for sustaining the advanced industry sector in the long term.


Companies Move Manufacturing Jobs Back to America
Muir, David, ABC News. 22 Feb. 2012.

There has been a growing trend of manufacturing jobs moving back to U.S. soil. David Muir of ABC News reported that an LED lighting company, Neutex, has reshored its operations from Shenzhen, China to Houston, Texas. The company's CEO stated that the reason was due to the increasing wages in China and said that it would be much cheaper to produce its product in Houston. Other companies, like GalaxE.Solutions (a software company that moved into Detroit), have reshored because of its need to be closer to its client base. Master Lock and Nat Labs are also bringing back manufacturing jobs to the U.S. in places like Wisconsin and Florida.


Bringing Jobs Back Home
Hastings, Scott P., Financial Advisor Magazine. 18 Feb. 2015

Scott Hastings' article in the Financial Advisor Magazine addresses some of the factors behind reshoring in addition to the challenges the trend might face in the future. Manufacturing companies that are choosing to reshore their operations wish to be closer to their customer base in the U.S. Not only are U.S. companies moving back, but other foreign manufacturing companies are increasingly opening facilities in the U.S. too, including: BMW, Lenovo, and Michelin. One of the challenges that Hastings highlights is the rising costs of health insurance, and he notes that the trend is not equal among all industries. Manufacturers of heavier products, like appliances, favor reshoring in order to cut back on transportation costs. Meanwhile, manufacturers producing fashion- and technology-related items will likely reshore in order to better address the fast-changing product cycle in those fields. Companies that have a large customer base overseas will likely find it practical to keep some operations in foreign facilities.


Here, There and Everywhere
Booth, Tamzin, The Economist. 19 Jan. 2013.

The first article in the Economist's special report on reshoring addresses the changing economic landscape of offshoring. Traditionally, companies in the U.S. offshored their work in order to save on labor costs; however, the tide is shifting. The labor "arbitrage" between the U.S. and countries like China and India is shrinking, and companies are recalculating their expenditures. Not only are U.S. companies bringing back some of their work from abroad, but foreign companies are opening facilities in the U.S. as well. Lenovo, a Chinese company that purchased IBM's ThinkPad computers, recently opened a customer center in Whitsett, North Carolina in order to be closer to its American customer base. Manufacturing jobs are not the only type of work being reshored; service jobs such as IT, data, and call centers are returning due to distrust in third-party suppliers in those areas. The increase in automation technology and the closing gap in global wage differential indicate that there will be an increase of pressure on politicians to make the U.S a more competitive workplace. As the report suggests, the U.S. will need to compete for jobs based on other factors such as worker skills and training, having "clusters of suppliers" in different regions, and having "sensible regulation."


Coming Home
Economist Staff, The Economist. 19 Jan. 2013.

In January 2013, the Economist published a special report with a series of articles on the topic of Reshoring Manufacturing. In an article titled "Coming Home," the authors note that wage increases in China, steady U.S. wages, and an increase in pay for senior management in China, Turkey, and Brazil are some of the reasons why companies are deciding to reshore. Other reasons include reducing the distance between manufacturing and design, so as to allow more room for innovation by reducing risk and to keep product quality high while being close to the customer base. According the report, southern U.S. states are attractive places to reshore because of the "right to work" policies there. This means that employees are able to choose whether to support a trade union, which ultimately means that unions are not very strong in the South. With high unemployment rates, people are willing to find work even for lower wages. Finally, Reshoring in the long term will increase due to advances in manufacturing technologies that make it even less labor intensive. It is important to note that the reshoring of companies may not always translate into more jobs.


Producing Prosperity: Why America Needs A Manufacturing Renaissance
Pisano, Gary P & Shih, Willy C., Harvard Business Review Press. 17 Oct. 2012.

Harvard Business School professors Gary P. Pisano and Willy C. Shih's book, Producing Prosperity: Why America Needs a Manufacturing Renaissance, discusses how exporting manufacturing jobs weakens the nation's "industrial commons."The industrial commons sustain innovation through webs of creative and technological knowledge networks that have a multiplier effect when industries and companies cluster together. These clusters allow for the sharing of ideas, collaborations, and knowledge creation that can spur the growth of new industries as well. Pisano and Shih describe the industrial commons as a platform for growth and note that a decline in the capabilities and competitiveness of one industry can have implications for another industry. The article includes a table of industrial capabilities that are already gone or at risk for leaving the U.S due to exportation of manufacturing.


Rural Outsourcers' Vie for Offshoring Dollars
Leiber, Nick, Bloomberg Business. 23 Sept. 2010.

Nick Leiber's piece in Bloomberg Business discusses a rise in information technology firms reshoring to the U.S. IT firms are finding it profitable to reshore to rural areas in the U.S., and this trend is known as "rural outsourcers. One firm, Cayuse Technologies, had a large increase in profit from sales in 2010 due to its move. Rural outsourcing is becoming an alternative to offshoring.


The Return of the 'Made in America' Label?
Yueh, Linda, BBC Business News. 18 Feb. 2015.

Linda Yueh's piece in BBC Business News highlights the state of Tennessee's leading role in reshoring. The article posit that a rise in advanced manufacturing in on the way as federal funding for research and development, particularly in the areas of science and technology, increases. Tennessee is leading the revival of manufacturing in the U.S. as wages in countries like China are rising and the cost of energy is decreasing in the U.S. However, the article also notes that there is a negative image associated with manufacturing jobs among the millennial generation that needs to be addressed. One way is through attempts to rebrand that image, since the modern manufacturing jobs that are returning are advanced and require higher skill sets than most manufacturing jobs in the past.


New Construction in U.S. Expected to Grow 10.5 Percent in 2015
CMD Group Staff, CMD Group. 5 Feb. 2015

CMD Group, a commercial construction information provider, produced this report on industrial construction starts in the U.S. The report concludes that manufacturing construction starts are on the rise. It is expected that construction starts will increase by 10.5% and is attributed to "increased business spending, an expanding manufacturing market, and sustainable wage growth." In addition, low energy prices and a decrease in the competitive advantage of other countries are increasing the demand for physical space for high value-added manufacturing in the U.S.


Workforce Development


The Importance of Growing New Talent for Manufacturing
Thorne, Jim, Daily Herald, 20 April 2015
Pursuing a career in manufacturing seems like an unlikely path for many graduating high school students today, despite America's need for skilled workers. Yet, a push for changing the negative connotations of manufacturing as being dirty and dangerous is on the rise among educators. Jim Thorne's article in the Daily Herald describes the success story of a high school student who graduated, started working in a manufacturing company full-time, and has now moved up to be the company's director of quality control while simultaneously working toward completing a college degree. Thorne notes that manufacturers have indicated that there is a skills gap among their workers and that the search for young workers with math and problem-solving skills has been very difficult. Overall, economic development practioners should constantly be working to improve their workforce's skill sets through training programs and partnerships with local community colleges and technical schools.


"The Skills Gap in U.S. Manufacturing 2015 and Beyond"
The Manufacturing Institute & Deloitte Consulting LLP, 2015

This report conducted by Deloitte and the Manufacturing Institute assesses the manufacturing industry's workforce and analyzes whether the workforce will meet the talent needs of the evolving U.S. manufacturing industry. According to the Deloitte analysis, 3.5 million manufacturing jobs will be needed by 2025, and 2 million of them may not be filled because of the widening skill gap in the workforce. Due to the changing nature of these jobs, workers need more training in computers, problem solving, and math. Some of the challenges facing recruitment of skilled workers include the negative image of industry work and a shortage of STEM talent. There are many opportunities and steps that can be taken to close the skill gap, but efforts are required on multiple levels, including the manufacturing, communities, and both federal and state government levels.


China's New Normal Means More Jobs in U.S., Good News for Yellen
Miller, Rich, Bloomberg Business. 13 Mar. 2015.

Rich Miller's piece in Bloomberg Business discusses China's shifting economy, which is moving from producer-driven to consumer-driven, thus giving the U.S an edge in creating more jobs in its manufacturing industry. China's success in exporting has been attributed to its large rural population moving into urban areas; however, according to Bloomberg Business's interviews, there is an expected decline in China's urban workforce. Currently, the U.S. is working towards closing the gap in workforce skills needed in addition to improving U.S. workers competitiveness.


Technology and R&D


How 3D Printing Will Impact American Manufacturing
Erickson, Steve, Manzella Report, 11 September 2014

3D printing is on the rise, and it is giving some manufacturing companies a reason to reshore production to the U.S. 3D printing saves smaller manufacturing companies in labor costs, and being closer to local markets means that companies can save on shipping costs as well. This improvement in manufacturing technology also plays a significant role in research and design, as manufacturers are able to develop and create prototypes more quickly. In addition, 3D printing can allow smaller companies and entrepreneurs to compete with larger companies in the market. Economic development organizations need to be on the lookout for small businesses and entrpenuers that are looking to use 3D printing. Although these companies may not initially have a high rate of job creation, the value of their products may increase over time, thereby improving the company’s revenue stream and benefitting the broader community.


Reshoring Successes


Our View: Black Diamond Brings Back Jobs
Standard-Examiner Editorial Board, Standard Examiner. 03 Mar. 2015

Black Diamond, an outdoor manufacturer of clothing and equipment for recreational activities such as climbing, skiing, and mountain sports, has reshored its operations back to the U.S. CEO Peter Metcalf reshored his company to Salt Lake City, Utah in order to consolidate its operations and benefit from the "brand-defining outdoor landscapes" that Utah offers. With the help and support of the Utah Governor's Office of Economic Development, Black Diamond is looking to remain in Salt Lake City long-term.


'Reshoring' Brings Jobs Back to U.S., including Pensacola
Johnson, Rob, Pensacola News Journal, 17 January 2015

In 2009, Hy-Lite, a U.S. block windows manufacturing company, reshored production jobs to Pensacola, Florida. The decision proved to be successful for the company, which is still benefitting from the move today. According to Rob Johnson's article in the Pensacola New Journal (PNJ), Hy-Lite CEO Roger Murphy saw an erosion in profit margins while manufacturing overseas. Roger Murphy said in his interview with PNJ: “It was absurd that the acrylic resin used to make the windows was made in the United States, shipped to China, and then the blocks transported back [to the U.S.].” Hy-lite closed their facility in China and and has reshored nine jobs with the potential to triple that number in their new facility as the industry recovers. The following factors made reshoring to the U.S. a favorable decision for the company: higher productivity levels, lower threat of intellectual property theft, and reduced energy costs. Reshoring has allowed the company to fill customer orders for the American building market much more quickly.


Re-shoring fuels growth at Colorado Mold Intertech Plastics
Antosiewicz, Frank, Plastic News, 1 February 2012

Intertech Plastics, Inc., is a supplier of plastic molds that has shifted some of its production from Asia and Mexico back to the United States. According to Frank Antosiewicz's interview with Noel Ginsburg, President of Intertech Plastics, the company has seen an increase in its customer base in the U.S. These customers are companies that have reshored and are now looking for U.S. suppliers for their businesses. According to Plastic News, Intertech Plastics doubled its sales from $20 million in 2011 to $40 million in 2012. The company's success is evident not only in its increased sales but also in its ability to purchase improved equipment and add 25 new employees. As companies start to reshore and source from local suppliers, the ripple effects can be felt throughout a community.


Made in USA (Again): Why Manufacturing Is Coming Home
Eric Markowitz, Inc. Magazine, 23 March 2015

Eric Markowitz's article in Inc. Magazine describes the reshoring story of Outsite Network, a manufacturer that moved its operations to Norfolk, Virginia in 2011. According to Markowitz's interview with CEO Anton Bakker, Outsite reshored and found a U.S. supplier (Zentech Manufacturing) to take the company's orders. The following are factors that made reshoring a favorable decision for the company: improved technology in the U.S., a decrease in the percentage of labor costs on the total cost of production, and an increase in shipping costs overseas.


Insights from Re-Shoring Manufacturing Business to Maryland
Peter Gourlay, Regional Manufacturing Institute of Maryland, 10 April 2013

Mei Xu's Chesapeake Bay Candle Company reshored its candle production to Glen Burnie, Maryland in 2011 from China and Mexico. The company was facing difficulties with labor and shipping costs, as their primary market for their candles was in the U.S. With the help of service providers, Ms. Xu was able to find the right facility for her company. Although the company faced some issues initially with permits and the regulatory process, the company has increased its candle production since reshoring to the U.S.


Reshoring Challenges


Reshoring Manufacturing Sounds Good, But Where Will You Put Your Factory?
Baljko, Jennifer, EBN Online, 20 March 2015

One of the challenges facing companies looking to reshore is where to locate their production facilities. According to EBN Online, there is a lack of quality manufacturing spaces, and many of the older facilities that are available do not fit the needs of modern manufacturers. To that end, the rental rates for facilities and warehousing spaces are high, and speculative commercial construction has started in different areas of the U.S. Economic development organizations can play a role in mitigating this challenge for companies by profiling and documenting the commercial real estate in their jurisdiction and making sure that information is accessible to companies looking to reshore.


Otis Finds 'Reshoring' Manufacturing is Not Easy
Mann, Ted, Wall Street Journal Online.12 May 2014

Ted Mann's article in the Wall Street Journal discusses the challenges that Otis, an elevator manufacturing company, faced when it relocated its operations from Nogales, Mexico to Florence, South Carolina. Otis wanted to return to the U.S because it would lower shipping costs by 17% and cut other costs by 20%. In addition, Otis' high-skilled workers (who live in the U.S.) will be closer to their facilities and can be called on more easily. Furthermore, according to Mann's article, 70% of their customers were in the U.S and Canada. Most of the challenges that Otis faced were internal because of its complex plan to reorganize two other U.S. facilities in addition to moving the Nogales facility. Because Otis had to fill a large demand, it experienced a heavy back-order with its move to South Carolina. The issue in this case was that Otis was trying to move its supply chain, its factory, and its engineering center simultaneously. It is important for companies that are considering reshoring to take note and fully assess their capabilities and start their move at a slower pace. Currently, Otis is back on track with its orders, and the company employs 380 full-time workers. This allows Otis to claim tax incentives from both the county and the state.