Is Exporting an Option?
Change is extraordinarily difficult for businesses, but few face the challenges that North American moldmakers face. Exporting may be an option, but finding the right solution is the key.
As global manufacturing expands and evolves, vacuums and opportunities are created. For North American moldmaking businesses, the former have made finding the latter very difficult. Most ecosystems and supply chains have completely shifted—geographically or economically—leaving many manufacturers out in the cold. Nevertheless, North American manufacturers of tooling and discrete parts do have options.
Is Manufacturing Work Coming Back?
There is evidence that history is repeating itself. Back in the mid-1980s, to save money, many U.S. businesses caught outsourcing fever and began farming out every internal business group they could—human resources, accounting, maintenance, and any others outside (what they believed to be) their core competency. But those companies began to realize that they’d sacrificed tangible value to their customers and themselves, and they began to reverse those trends. Some things remained contracted, but many functions were repatriated back within direct company control.
Today, empirical evidence suggests that Western OEMs and Supply Chain principals are reassessing their original decisions to offshore manufacturing to save money in low-cost countries. Unforeseen costs—such as logistics, training, quality, inventory maintenance, rising labor rates and currency fluctuations—are forcing some companies to repatriate work back to countries of origin. Recent examples of companies in the West repatriating work from low-cost countries include Crown Battery (Ohio), Sauder Woodworking Company (Ohio) and Steiff (Germany).
There are other examples, but all of them may not add up to a trend that moldmaking businesses should plan for or count on. Many initiatives are also in play to create a green energy manufacturing ecosystem through government investment. Despite the fact that debate about the value of manufacturing is finally resonating within the public and all levels of North American governments, the repatriation or creation of any manufacturing work significant to moldmakers is likely months or even years away.
Exporting May Offer a Viable Solution
In a recent poll conducted by MFG.com, more than 1,600 moldmakers in North America were asked a series of questions about their current business posture and the plans they have for future business development.
- 74% of respondents do not manufacture tooling for export
- 91% of respondents had no plans to manufacture tooling for export
- 67% of respondents had no unique products or processes that they feel are marketable for export to foreign markets
- Of the 33% of respondents that do have unique products for export, 61% are Canadian manufacturers selling to the U.S.
- 100% of respondents without unique products for export say they would like to
The will to reinvent businesses is strong among these manufacturers, but is there a way? A significant result from the rapid evolution of global manufacturing industries is the emergence of strong consumer markets. In this context, the first country that comes to mind is China. But Brazil, Russia and India—which, with China, make up the BRIC market(s)—are showing options for opportunistic, export-minded companies.
Some North American moldmaking companies have adjusted their businesses to capitalize on the shifting business winds (i.e., Superi/Victory Manufacturing, American Quality Assurance Corp.) by setting up facilities in low-cost countries. But whether this specific approach offers long-term or scalable solutions remains to be seen.
There are options for U.S. small- or medium-sized manufacturers (SMMs) to investigate to help them refocus their businesses or to pursue exporting/product development strategies.
Trade Adjustment Assistance for Firms (www.taacenters.org)
The TAA is a network of offices throughout the U.S. that will match funds to help companies that have been impacted by outsourcing to train, market and reinvent themselves to serve new markets or industries. In place since the 70s, the program was recently updated and expanded. Companies must submit a petition for funds and the process takes from 90 to 120 days to complete. If approved, a company can receive a 50 percent match on investment, up to $150,000 (TAA share-$75,000).
National Innovation Marketplace (www.planeteureka.org)
The NIM is a marketplace run by a group consisting of Doug Hall’s Planet Eureka (keynote speaker at PDx/amerimold in May), the U.S. Department of Commerce/NIST and the Manufacturing Extension Partnership. Simply put, NIM walks SMMs through all phases of taking new products/processes to market: market research, patent application, intellectual property protection and sales (either into markets or to an OEM).
These options may or may not be right for your business, but exploring opportunities to capitalize on emerging markets or adjusting your business for longer term growth through exporting deserves a hard look.
This article is the third of a five-part series on business developments affecting North American moldmakers and manufacturers, and how best to capitalize on emerging trends to grow and redefine manufacturing businesses.