Reshoring Trends. MS MIIA Reshoring Summit. Harry Moser President Reshoring Initiative

Transcription

1 Reshoring Trends MS MIIA Reshoring Summit Harry Moser President Reshoring Initiative 1

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3 The Bleeding has Stopped New Offshoring New Reshoring & FDI Net Jobs Gained Manufacturing Jobs/Year Annual Average 2015 % Change ~240,000 ~60,000-75% 12,000 67, % ~-220,000 ~0 N/A 3

4 Losses on Out-of-Stocks & Overstocks U.S. Retailers Losing $250 Billion/year from Out-of- Stocks & Overstocks Reshoring improves product availability through shorter lead times via shorter supply chains. Source: Retail's $1.1 Trillion Inventory Distortion Problem, Typical Markdowns by Retailer Category Source: Sourcing Journal, Zara Gap: Change the Culture, Change the Game, Apr 2016/

5 Apparel Industry: Better Margins and Response Smaller runs of garments that sell at full-price are better than volume runs of garments that have to be sold at discount. Source: FASHION RESUOURCE NETWORK: Aug 11, 2014

6 Definitions Reshoring/Backshoring/Onshoring/Insourcing: Bringing back manufacture of products that will be sold or assembled here: Same or different company Same or replacement product OEM or contract manufacturer Transplants/FDI: Similar logic Producing near the consumer Localization! 6

7 Flawed Company Economic Model 60% of manufacturers: Apply rudimentary total cost models Wage Arbitrage PPV (Purchase Price Variance) Landed Cost Ignore 20% or more of the total cost of offshored products Source: Archstone Consulting survey, American Machinist Mag., 7/16/09 7

8 Indexed Unit Labor Costs in the Manufacturing Sector of Selected Countries 8

9 The Industry-Led Reshoring Initiative Provides Online Library of 3,500+ reshoring articles Statistics from TCO and Library databases Case Study template for posting cases. Motivation for skilled manufacturing careers Free Total Cost of Ownership (TCO) software for: Companies for sourcing Suppliers of parts and equipment for selling * NIST s MEPs also offer a TCO system. 9

10 TCO Comparison Example 10

11 2012 TCO cases, China vs. U.S. Comparison Basis % of cases where U.S. has the advantage Price 5% TCO 53% Difference 48%* *Conservatively 25% might return if companies shifted to TCO Source: TCO user database 11

12 Some National Reshorers 12

13 Water Heaters Bringing Production back from China: Water-heaters, fridges, and washing machines Unionized facility in Louisville, KY 1300 jobs, renovated facility, $800 million invested Reasons: Tax incentives High-tech new model Ease of design collaboration with workers: retail price -20% 2 tier contract Chinese cost: -30% becomes +6% considering inventory and delivery problems Jobs at U.S. suppliers : 20,000

14 Walmart s U.S. Manufacturing program Walmart s increase in U.S. manufactured purchases: $250 Billion over 10 years In the 10 th year: Approx. 300,000 manufacturing jobs* Approx. 1 million total jobs** *Reshoring Initiative **Boston Consulting Group 14

15 Resources for Retail Suppliers Purpose: Help suppliers supply more Made in USA products Developed for Walmart. Will invite all retailers Page on Walmart USA Mfg. site, w/links to Nine Resources on Initiative site: Timing Product Selection Revaluation Competitiveness (including USCTI) Suppliers Retailers Compliance Transition Financing Personal contacts at 35 associations/companies/commerce 15

16 Circuit Boards Woodridge, IL Supplies heavy equipment companies Had quality issue with a Chinese component Found local IL source Result: Quality problem fixed Inventory cut by 94% $25M order 16

17 MS Reshorers 17 17

18 Upholstery From overseas to New Albany, MS 150 jobs $2 million investment First domestic factory Reasons: 18 For us to continue to grow, we felt we had to have domestic production as part of our program. We think it will help us to become a more complete supplier. Assistance from the MDA, TVA, the City of New Albany and Union County Source: 18

19 Auto Parts and Assembly Work Mexico to Pelahatchie, MS Won Chrysler contracts over bidders and parts makers from Mexico, Europe and Korea $250,000 investment to accommodate an increase in production 30 jobs Reasons: Quality: Zero defects record Trust Price Source: Jeff Amy, Miss. Aims to lure factories from other countries. Business Week. August 21, Ted Carter, Mississippi getting the nod in reshoring decisions. Mississippi Business. August 26, Wally Northway, Is onshoring the new trend? Local manufacturers finding a more level playing field. Mississippi Business Journal. November 19 29,

20 Commercial Refrigeration Compressors France and Brazil to Verona, MS 150 jobs Reasons: To help expand sales in North American market Mississippi Development Authority provided financial assistance with building modifications and equipment To meet growing demand Source:

21 Steel Parts for Sporting Equipment China to Amory, MS 100 new jobs over 4 years Reason: United Steelworkers Union aided plant workers in ratifying a contract which stipulated the closing of a plant in China 21 Source: 21

22 MS Kept from Offshoring 22 22

23 Recliners (Kept from Offshoring) Potontoc, MS instead of China Since 2007 has grown its local workforce from 500 to 1,300 Reasons for not offshoring: Image/brand Skilled workforce Source: Wally Northway, Is onshoring the new trend? Local manufacturers finding a more level playing field. Mississippi Business Journal. November 29,

24 MS FDI 24 24

25 Japan to Canton, MS $2.9 billion investment To rationalize supply chain 25 Automobiles (FDI) Nissan Canton Vehicle Assembly Plant directly employs 6400 people, generates over $300 million a year in local and state taxes, and generates $2.6 billion a year in disposable income Plant is responsible for 25,000 jobs statewide Benchmark: By 2015, 85% of all Nissan vehicles sold in the US to be built in North America Reasons: Government incentives Proximity to market Sources: Emily Wagster Pettus, AP. Nissan building park for suppliers at Miss. plant. Manufacturing.net. July 31,

26 Leather Tanning (Foreign Direct Investment) Vietnam and China to Vicksburg, MS Leather supplier to footwear companies such as Timberland, Rockport, the US military and others 366 jobs $10.1 million investment Reasons: Lead time/time to market Quality Proximity to North and South American markets Government incentives 26 Sources: TanTec Leather to Locate Tannery in Vicksburg. Mississippi.org. May 12, ISA TanTec to create 366 jobs at Miss. Tannery. Bloomberg Business Week. May 12,

27 Tissue Paper (FDI) Italy to Hattiesburg, MS 230 jobs $120 million investment Reasons: Quality real estate available for immediate occupancy Pro-business environment Skilled workforce Government incentives Proximity to customer base 27 Source: 27

28 Reshoring, KFO and FDI to MS INDUSTRY # OF CASES JOBS (FDI) Transportation Equipment 11 10, Electrical Equipment, Appliances & Components Apparel & Textiles Rubber Products (Tires) Non-Metallic Mineral Products Furniture Call Center Paper Products Wood Products Fabricated Metal Products Misc TOTAL: 27 16, JOBS (RESHORING/KFO)

29 FDI into Mississippi COUNTRY JOBS COUNTRY JOBS Japan 11,065 Denmark 240 Germany 3530 Italy 230 Netherlands 500 Brazil/France 150 France 490 China 100 Canada/China 462 Israel 100 Vietnam/China 366 England 54 Switzerland 300 Mexico 30

30 Reasons for Reshoring, KFO, and FDI in MS Skilled workforce Positive business environment Government incentives/ Assistance from MDA (or other agency) To meet growing North American demand Proximity to customer/ market Workforce training programs Lead time/ time to market Quality Trust Image/ Made in America brand appeal Innovation Quality of life Transportation/ infrastructure Walmart pledge Raw materials Total cost

31 Top Countries From Which Reshored to the U.S. Global Region Cases Asia 241 North America Western Europe Eastern Europe Country Cases China 194 Mexico 27 Canada 10 Taiwan 9 Japan 8 India 7 Italy 6 Korea, Malaysia, Hungary 3 each Source: Reshoring Initiative Library, December

32 Objective of Reshoring Balance the $500 billion trade deficit: 4 million manufacturing jobs Cut U.S. budget deficit by about 50% Strengthen the middle-class 30% increase in manufacturing If spread over 20 years: 25% extra annual capital equipment investment Allow productivity and growth in mfg. employment

33 1/11/12 Insourcing Forum 33

34 How You Can Use the Free Tools Decide what to produce or buy in-market Sell against imports Identify prospects that are reshoring and FDI Help customers decide to produce more domestically 34

35 How to Get Started Ask about pain and opportunities: Delivery/air freight (W. Coast dock delays) Orders lost due to delivery or slow response Quality Excess inventory Travel Late night calls IP loss or risk Regulatory issues Purchase price rising Corruption Violence Natural disasters or political instability

36 CSR Estimator Will Provide For companies: Standard tool to include externalities in sourcing decisions. Identification of the products with the best shareholder and sustainability returns. Help justifying the marginal opportunities Recognition for success, For advocates:. Tool to advance an economically and environmentally sustainable economy. 36

37 How to Un-tilt the Playing Field Skilled workforce Lower USD Lower corp. tax rates VAT Train on TCO Then negotiate trade agreements 37

38 Available To help any candidate or EDO develop and implement a reshoring program

39 A non-profit with 28 sponsors, including Platinum Gold Gold Gold G Silver 39

40 Help Reverse the Offshoring Flood Now! Contact: Harry Moser Founder and President