What is Reshoring and Why is it Important?
Remember all those manufacturing and injection molding jobs we used to have in the United States, and then companies started moving to other countries to take advantage of cheaper labor? That is called "offshoring". It is a practice that arguably killed the whole "Made in America" ideal and dealt a heavy blow to our economy. But before we get our blue collars in a twist, I have some good news; it goes by the name of "reshore", that's right, the return of manufacturing to our shores.
The Reshoring Initiative
Harry Moser, former U.S. CEO of AgieCharmilles, is the creator of the Reshoring Initiative. "Reshoring is happening," says Moser. "Labor costs in China are going up, and Chinese workers are beginning to demand workable conditions and hours. Breakdowns in global supply chains such as the one caused by the Japan earthquake, political uncertainties, expensive transportation costs, the need to be more responsive to customer demands and declining prices for U.S. natural gas and electricity are contributing to companies re-thinking their offshoring decisions."
All About the Money
Now that the US dollar has been so weak for so long, the attractive low cost labor of other countries isn't so low any more. In addition to the tanking of our economy, the cheap labor, and skilled labor including injection molding, of those countries is not only cheap but also smart. They formation of labor unions and popularity of strikes is on the rise and workers are starting to demand a fare, living wage, insurance, and vacation time, or at least non-threatening working conditions. So it turns out the American worker may be more affordable, after all.
The Trend Begins
It's anyone's guess as to what the outcome will be; hopefully it helps us to return to the premier manufacturing country we once were. The Reshoring Initiative has chronicled hundreds of examples of companies bringing production back to the United States, including General Electric water heaters, Master Lock locks and WHAM-O Frisbees, to name a few. "If they can make Frisbees competitively in expensive states such as California and Michigan, a broad range of products are reshorable somewhere in the U.S.," says Moser.
The organization's Total Cost of Ownership software has found that the average price of a product or injection molding made in the United States is 142 percent higher than in China. But when the total cost of ownership is calculated, the U.S. price disadvantage shrinks to 23 percent. "For 40 percent of the cases, U.S. total cost of ownership is lower than Chinese total cost of ownership, averaging 37 percent lower," says Moser. The conclusion: "Using total cost of ownership instead of price brings the percentage of the sample that a company would source [in the United States] up to 40 percent from 15 percent. The lack of skilled workers must be addressed now if we are able to compete in the future," he continued.
Crescent Industries is a single source solution for injection molding and mold building. We provide engineering, mold building, injection molding services and several value added services to complete your project. We have successfully transferred over 250 tools for our customers following our documented tool transfer procedure. For more about Crescent Industries capabilities, call 1-800--411-3844 or visit our website http://www.crescentind.com/index.html.
