How to Determine Whether Reshoring Is Right for Your Business

MCEOB: Will 3D help facilitate reshoring?
HM: It’s not clear in the near-term. Additive manufacturing is hot, but mainly for prototypes and shapes you can’t make otherwise. It generally doesn’t apply to real production except in rare cases. It’s not clear whether you can get the accuracy and surface finish, or whether the cost is competitive for most products. The costs have to come down, cycle times have to improve and accuracy and surface finish have to improve to have a significant impact. Great progress has been made, but we need more.

MCEOB: Finding the right employees for manufacturing positions is a challenge right now. What advice would you give to a manufacturer bringing jobs to the U.S. who may be looking for a specific type of experience?
HM: Start by running an apprentice program, with the theoretical training done at the local community college. Then get on the advisory board of your community college’s technology/ manufacturing program to help make sure the courses are relevant to you. Third, hire the best students. Finally, get everyone—the college and your company included—to refer to these jobs as professions. Show the financial benefit and improve the image and desirability. Get all companies in your community with successful reshoring projects to report their case studies to the local media and schools so everyone—from guidance counselors to students to parents—sees manufacturing as a good field to go into.

MCEOB: Can you cite an example of a company that has successfully reshored?
HM: The single best example is GE Appliance. They were having three appliance models made in China. They brought samples back to their huge Appliance Park facility in Louisville, Ky., invested about $1 billion and created 1,300 jobs. They put the samples in the war room. The designers and engineers tore them apart and put them back together. When they were done, the thermal efficiency was improved, warranty costs were cut, and even though wages in the U.S. were five times higher than in China, the U.S.-made product sells for 20% less today than the product they had been importing from China.

MCEOB: What are the total-cost-of-ownership factors that manufacturers typically need help with when considering reshoring and how do you respond to those questions?
HM: They want to know how to measure the intellectual property risk and the political instability risk in the other country. I can’t answer those questions. That’s where this acetool website can help. It has data on a lot of those qualitative factors. We can show the distribution of inputs by other users.

MCEOB: Where do you see manufacturing reshoring in five years, and what has to happen stateside to keep reshoring moving forward?
HM: We typically add together both reshoring and foreign direct investment when we look at projections. Recently, foreign direct investments have been booming. Right now, we’re at about 40,000 net of offshoring coming in annually, and I see that getting to 80,000 a year, maybe 100,000, in five years. That’s only about 1% of our total manufacturing employment, but that’s about as much growth as our skilled workforce can handle right now. We don’t want it to grow any faster than that because we need the training to grow with the market.

The mission of the Reshoring Initiative is to bring good, well-paying manufacturing jobs back to the United States by assisting companies to more accurately assess their total cost of offshoring, and shift collective thinking from ‘offshoring is cheaper’ to ‘local reduces the total cost of ownership’. Find out more about the Reshoring Initiative at https://www.reshorenow.org.

Additional Resources
Case Studies: Reshoring Initiative
Case Studies: U.S. Dept. of Commerce
Total Cost of Ownership Estimator
U.S. Department of Commerce Assess Costs Everywhere