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Re-Shoring Effort Helps U.S. Manufacturers Make It Better
02/26/2010
Each week, the White House and Congress announce a new plan to "Save U.S. jobs, especially manufacturing jobs ". Re-shoring, also called “back-shoring” and “on-shoring”, is a non-protectionist, private sector-driven way to reduce imports (and our trade deficit), increase our "net exports" and create jobs. Reshoring means bringing lost manufacturing jobs back to the U.S. by uniting large manufacturers with competitive domestic suppliers. Going local can reduce a company's total costs and offer a host of other benefits, while bringing U.S. manufacturing jobs back home.
As longtime GF AgieCharmilles customers know, our Chairman Emeritus, Harry Moser, has for many years been committed to helping U.S. manufacturers compete. Just check out some of the documents in the "Chairman's Corner" of our website. Harry's efforts have led him to conceive of the re-shoring plan and convince the NTMA, PMA and AMT to proceed with their annual Purchasing Fair -- under a new focus. But of course, current domestic work is still welcome at the Fair too!
For 25 years, the NTMA and PMA have hosted a Contract Manufacturing Purchasing Fair that made it easy for OEMS to find high quality, competitive U.S.-based sources in a one-stop-shopping venue. But this year, they are also encouraging OEMs to rethink the sourcing paradigm from “Off-Shored is Cheaper” to “Local Reduces Total Cost of Ownership.” The National Tooling and Machining Association (NTMA) and the Precision Metalforming Association (PMA), in collaboration with the Association for Manufacturing Technology (AMT), will host this first-ever "Re-Shoring Fair" May 12th, 2010 in Irvine, California.
In previous years, the Purchasing Fair primarily redistributed the special tooling, metal stamping, and machined parts and components work being manufactured in the United States across our country. This directive is still important to the 2010 Fair. But this year, the goal of the Purchasing Fair is also to bring work (and manufacturing jobs) back to the United States from abroad. How will this happen? 50-100 OEMs will be bringing work, much of which is off-shored, for bid by 200 U.S. vendor job shops that can then review, quote, follow-up, get orders, and perform the manufacturing here at home.
How can OEMs reduce their Total Cost of Ownership by re-shoring?
- Stable costs (wages, exchange rate, utilities)
- Logistics (no two month pipeline impacting inventory and JIT)
- Minimized risk (IP, quality, vendor product liability, supply chain stability, regulatory compliance for product, environment and safety)
- Product development (manufacturing near R&D helps innovation)
- All this results in lower Total Cost of Ownership
- And a lower carbon footprint: typically 50% lower!
What are the benefits for the country?
- Strengthens and broadens manufacturing and defense base
- Strengthens SMEs, the source of job growth
- Reduces trade deficit, budget deficit, and unemployment
What are the ideal characteristics of companies who will participate?
- JIT logistics with variable demand
- Valuable intellectual property
- Tight regulatory and/or quality requirements
- Partners with contract manufacturers
- Committed to minimized carbon footprint
- Desires image of commitment to U.S.
What are the ideal characteristics of the re-shored parts?
- Contract manufactured machines and stamped parts and tooling
- To be sold in North American market
- High mix/low volume
- New/quick launch/frequent engineering changes/short life cycle
- Fragile
- High risk, safety parts
- Low labor content
- Shipping cost high vs. labor costs
- Outsourced off-shore, not own production
Why is it important to reduce imports vs. just increasing exports?
- Goods imports 66% greater than exports
- It is far easier for a U.S. company to compete here than abroad. All of the following are an advantage vs. imports and a disadvantage when exporting:
- Duty, freight and ocean packing
- Interest on pipeline and contingency inventory
- One known language, legal and regulatory system
- Fixed costs of overseas sales and support vs. simplicity of selling into huge home market
- Exchange rate risk
- Vs. exporting, total cost advantage > 24%, similar to total direct labor % of manufacturing cost
- Timing
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Now is the time to re-shore! Here's why:
- $ down vs. most currencies and forecast lower
- High foreign wage inflation
- Low domestic capacity utilization. Top employees available to launch production
- Focus on increasing employment
- High priority on reducing carbon footprint
- Risk to national stability from ongoing huge trade deficits
- Awareness of intellectual property and quality risks
- Inability to respond to surge in demand with low inventory levels and 2 month pipelines
Work is starting to come back to the U.S.A! Get involved now!
OEMS that now off-shore work: register for the Fair and check out all the competitive U.S. sources.
Machine shops, stampers, tool and mold makers: register, attend, and compete for the work! You do not have to be a member of the sponsoring associations.
Companies that have already participated in re-shoring successes: share your stories as case histories for the many magazines that will cover the Fair and the growing re-shoring trend. These case histories will provide you with publicity for your global competitiveness!
The NTMA/PMA Re-Shoring Purchasing Fair will be May 12th, 2010 at the Hyatt Regency Hotel in Irvine, California.
To learn more and to register for the Re-shoring Fair, please visit:
https://www.ntma.org/eweb/ProfilePage.aspx?WebCode=CSCEventInfoSC&evt_key=0bd0ea71-bbf9-4e3f-8d23-f3ec1d9e8fcc
Also, GF AgieCharmilles has made its Chairman Emeritus, Harry Moser, available to lead an industry wide effort to start the recovery by re-shoring work that is now off-shored. Please join us to discover our shared competitive interests!
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To read testimonials from OEM attendees of past Purchasing Fairs, click here: https://www.ntma.org/eweb/docs/Marketing/PF_Testimonials.pdf
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