Reshoring Initiative Makes the Case for Making It Here
An industry-led program in Illinois is working overtime to bring outsourced jobs back to the U.S.
Ask any American worker about the concept of “offshoring,” and you’re sure to start a conversation; with as many as three million U.S. manufacturing jobs lost over the past 10 years, it’s a charged topic. Yet ask that same worker about “reshoring,” and you may get only a quizzical look – and that, says Harry Moser, is part of the problem.
A 40-year manufacturing industry veteran and retired Chairman Emeritus of GF AgieCharmilles, Moser founded the Reshoring Initiative, a non-profit, non-protectionist effort working to move lost jobs back to the U.S. For his efforts with the national Reshoring Initiative, he was named to Industry Week magazine’s Manufacturing Hall of Fame in 2010.
To apply the principles of the Reshoring Initiative, Moser started the Illinois Initiative with partners Rand Haas of Medusa Consulting Group and Mohammad Faheem of the Illinois workNet Center. Since then, more than 40 other organizations have lent support, including the Illinois Manufacturing Extension Center, the Association for Manufacturing Excellence and Northern Illinois University.
It’s not that people have misperceptions about reshoring, Moser says; it’s that their misperceptions about offshoring keep them from even considering the possibility of bringing jobs back. “People think offshoring is inevitable; but in the long term, you can make a 100-percent positive case that they’re wrong.”
Uncovering the Hidden Costs
As the U.S. economy becomes more services-oriented, Moser explains, the trade imbalance will continue to grow. “Right now, China is willing to send us things because they get dollars, and they believe the dollar still has value. But if we reach a point where our trade imbalance has gone on at thalf a trillion a year for years or has risen rapidly to one trillion dollars a year, they will stop sending us things. In the long run, unambiguously, economists agree that the U.S. cannot continue to decline in the amount that it produces.”
The key to resolving this imbalance, Moser says, is to help American companies serve local markets by bringing back jobs. A typical Illinois moldmaker may have a tough time competing against a Chinese moldmaker in Illinois; but for that same Illinois moldmaker to compete against a Chinese moldmaker in China would be nearly impossible. “It makes more sense to encourage that Illinois company to compete locally, where it has a chance, than to compete overseas, where it has essentially no chance,” Moser says.
That’s where the Reshoring Initiative can help. Moser has developed a proprietary software product to help manufacturers determine the Total Cost of Ownership (TCO), uncovering the often “hidden” or miscalculated costs of offshoring. These include travel costs to go check on production and supply; skyrocketing oil prices, which impact transportation costs; intellectual property loss; rapidly increasing foreign labor costs (at the current rate of 18 percent, Chinese worker wages will double in four years); and months of extra inventory.
"I know of an electronics manufacturer (Morey Corp. in Woodridge, IL) that reshored a component and reduced its inventory of that component by a factor of 18. That’s incredible! If other companies knew the possible benefits, more would be willing to consider reshoring,” says Moser.
For this reason, the Reshoring Initiative has made the TCO Estimator software available for no cost through its website, www.reshorenow.org. This will help OEMs compare the true TCO of local versus offshore sources and help job shops sell the benefits of local sourcing to their customers. The next step for mold manufacturers is to help this Initiative customize the Estimator specifically for molds, but they need your help. If you are interested, please contact harry.moser@comcast.
The site features the following to help companies make better sourcing decisions:
- Free software that helps the large companies calculate the real offshoring impact on their P&L
- Links to NTMA/PMA Purchasing Fairs to help them find competitive U.S. sources
- Publicity to drive the reshoring trend
- Online Library of 98 articles about successful reshorings
What You Can Do to Help Your Company and Country
Customers: Use the Estimator to understand your true cost of offshoring.
Moldmakers: Use the Estimator to help sell your customers on the benefit of sourcing molds locally.
o Send examples of successful reshorings to firstname.lastname@example.org or email@example.com. We will do our best to report them in MoldMaking Technology, as well as seek other media coverage and use in presentations.
o Contact (847) 726-2975/ firstname.lastname@example.org for assistance with making the offshoring/reshoring decision. No charge.
o Propose Reshoring Initiatives in your region.
o Send suggestions on how to customize the Estimator for molds (e.g., include costs and features that are relevant for molds, but not for parts—ones that are often not included in offshored molds).
• Cost to reverse engineer since prints or CAD/CAM files are not available
• Slower cycle time
• More repairs
• Shorter tool life
• Missing safety features
*Send additions to this list and share real-life examples we can use to quantify these costs by e-mailing them to email@example.com
Any interested individuals or groups in states with a large, dense industrial community should feel free to contact him about having a local or regional Reshoring Initiative.
“So far, our focus has been on the machining industry – parts and tools like molds and dies. In machining, labor costs are important but not all-consuming; in many cases, a better understanding of TCO is all it takes to convince people. We know this industry, and we have produced many success stories – but we also have success stories in electronics, textiles and other industries.”
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