Reshoring: The US Side
Posted by Craig Mottershead on Wed, Feb 15, 2012 @ 08:47 AM
Last week I discussed the likely reasons why (China’s infrastructure, technical ability, consumer market, existing supply chains and economies of scale) jobs would not reshore back to the US. It’s no secret all the reasons listed above present significant challenges for organizations wanting to bring their manufacturing inshore. But there is hope.
For starters, there’s Harry Moser. His career in manufacturing spans four decades but more importantly he founded and is now the president of the Reshoring Initiative where their main goal is bringing manufacturing back to the US. Most recently he was invited to the White House to participate in a daylong Inshoring Forum hosted by President Obama. While there, they discussed tactics, policies and what incentives could be implemented to strengthen the US job market. This forum garnered major attention for the inshoring movement and Mr. Moser’s hope is more US companies will reevaluate their options in the coming months and years. And seeing how his initiative is backed by the highest levels of the US government it has serious potential to help many organizations make the transition back home.
Secondly, beyond the characteristics attracting US organizations overseas, Chinese suppliers were given tremendous incentives by their government to supply exporting companies. Now times have begun to change. The Chinese government is facing outside pressures in regards to their labor wages, currency evaluation and rate of inflation. All factors combined create an uncertain economic, social, and political picture. Although not at a boiling point, Chinese officials might be tempted to make changes (removing export incentives, tax rebates, etc) to improve diplomatic relations.
Lastly, industrial products are produced and derived from the input of raw materials. Many of which are commodities priced on a world scale. Making the only production differentials labor, process and energy costs. If all factors become equal or close to par with the US, outsourcing overseas no longer makes economic sense. At this point organizations would forced to rethink their production strategy and if there was no reason to stay overseas (market position, consumer consumption ability, technical capability, etc) the transportation costs alone would be too great to ignore.
So while the future of manufacturing may appear to favor staying in its current capacity. One aspect is clear. The US can directly affect the number of jobs it brings back to its shores by the level of support and commitment their willing to show US organizations.
That’s it for today. Stay tuned for the next weeks post.
(For more than 10 years, GCP Industrial Products has successfully offered its customers a unique sourcing process that allows them to save money, streamline their supply chain and grow with new products. Our plans are to continue to grow based upon mutually beneficial relationships and the quality of our products and services to our ever growing customer base. To contact us please click here or phone 1-888-893-5427. Thank you.)