ReShoring Manufacturing in the U.S.A.

Many US companies have moved manufacturing off shore and focus on sales and distribution in the US marketplace. I am sure everyone is aware of the fact that most of our goods are manufactured overseas. Many manufacturers are now transforming their companies into wholesale distributors with a whole set of new business and operational issues. Quality control can be a problem so these companies offer very lax return policies and good prices to the consumer. Hence the need for customer service teams and tools at these companies. Lead times and inventory planning is also a challenge that can be overcome with the right forecasting and planning tools. Knowing the language and having an understanding family for all the trips made to follow-up on production is a plus. I have told my nephew, an engineering student at Louisiana Tech, that he needs to learn Mandarin so he can make the big bucks.

Consumers are trained to keep boxes and receipts and to be prepared that something is going to be missing from the box or that items sometimes do not work. However, these same consumers (me included) keep buying the made in China products and keep complaining about our economy. To be fair, the companies that outsource have increased sales, added employees to handle the sales, incoming inventory, quality control, customer service, and of course manufacturing experts that travel back and forth to China. So jobs are being made for US staff, airlines, transportation companies, etc. But is it enough?

I saw an article in Industry Week by Josh Cable about Harry Moser’s Reshoring initiative; The Pied Piper of Manufacturing. I am very impressed with what he is trying to accomplish. Moser began his initiative to bring back manufacturing to the United States in 2009. With a long career in manufacturing, Moser has taken his retirement to found and focus on a not for profit organization, the Reshoring Initiative.

Here are some excerpts from the article.

“The crux of Moser’s argument is that if U.S. manufacturers take into consideration the “total cost of ownership” for products made in China but destined to be sold in America — transportation costs, reject rates, foreign wage inflation, potential intellectual-property theft and other factors — the United States compares favorably with China and other so-called low-cost countries.”

To help quantify his argument, Moser has developed a software tool — TCO Estimator V.5 — that compares the costs of manufacturing parts and tools in 17 countries, based on 29 factors (such as freight and wage rates). The software can project manufacturing costs five years into the future.

Industry Week Question: All eyes are on Washington right now to see if and how the government can remedy the debt crisis. How could reshoring help? I know you’ve estimated that bringing back offshored manufacturing jobs could add several hundred billion dollars in annual revenue …

Harry Moser Answer: First, the people who are working pay taxes and they don’t take unemployment and Medicaid and these extended-benefit kinds of things. And the companies that are working here and have more work here are paying more taxes and there’s more sales tax.

So reshoring probably could do as much as the Democrats and Republicans are fighting over – and without any cost.”

As a company that needs US manufactures to help support our livelihood, I am of course a proponent of US manufacturing. I have worked with manufacturers for 15 years at CIS helping solve business and operational issues with software from Microsoft Dynamics GP, Vicinity Manufacturing and BatchMaster.

About Custom Information Services

Located in North Texas, Custom Information Services has been implementing and supporting companies in the financial sector, process manufacturing, discrete manufacturing and distribution since 1989. CIS does not outsource any of our support etc. overseas. Please feel free to contact me at nphillippi@customis.com.