October 2024 Reshoring Initiative E-News: IMTS and 2024Q3 Review
Reshoring and Foreign Direct Investment (FDI) have experienced exponential growth over the last few years, with more than 2 million manufacturing jobs announced to return to the U.S. since 2010. Several factors, including a strong U.S. economy, bipartisan support, and ongoing geopolitical and climate risks, indicate that our domestic industrial base is poised for further growth. However, while new cases and job announcements remain robust, the pace has slowed since mid-2023. A temporary dip in this rate is expected, due to the time it takes to build the needed physical and human infrastructure, high interest rates and political uncertainty. Also, policymakers continue to focus on niche industry segments rather than prioritizing broader competitiveness through a lower USD and more skilled workforce – the very actions that would most benefit continued momentum. This newsletter explores key developments in achieving these goals.
Last month, hundreds of pagers exploded in people’s hands in Lebanon, leading many to question the security of the supply chain. A company’s global supply chains can have hundreds or thousands of potential supplier connections. How many companies know all those suppliers? And how does one know there isn’t some vulnerability inside them?
China is punishing companies with costly fees and damaging public relations if they try to leave because of the U.S. Uyghur Forced Labor Prevention Act.
Shein shoes sampled had 229 and 428 times the legal limit for phthalates and handbags with 153 times the permitted limit; nail polish from the most downloaded shopping app was found to have dioxane (a possible human carcinogen that can cause liver poisoning) at levels more than 3.6 times the allowed limit and methanol concentrations 1.4 times above the acceptable level. The Seoul Metropolitan Government said that of the 22 goods from Temu, Shein and AliExpress tested half were contaminated with carcinogens and deemed unsuitable for use.
This recent evaluation concludes that offshore sourcing adds, on average, 27% to FOB price. RI observes: This figure matches our TCO user data. Analysts should include this data in their models before predicting that using a lower USD and tariffs to drive reshoring will hurt the economy and accelerate inflation.
This article aligns with RI statements that U.S. companies detrimentally cut back to core competence (finance, research and marketing) when they offshored manufacturing. “At the core of the outsourcing trend… was the idea that an “asset-light” firm focused on intellectual property and its “core” expertise would be better run.” This turned out not to be the case. Instead, it caused exponential damage to Boeing’s product quality, profits, and reputation.
China’s overcapacity in plastics production could exacerbate existing global trade tensions. “Everyone in China has this notion that if they are fast enough, if they are the first in the industry, able to burn cash long enough, then they will become the survivor that takes market share. And then they can raise the price.” RI observes: China has imposed that strategy on the U.S. for 20+ years.
PNTR, also known as Most Favored Nation Status, provides countries with low or zero duty rates. RI observes: It makes no sense to give this benefit to China.
The US and Mexico have announced new measures to prevent China and other countries from circumventing US steel and aluminum tariffs by shipping these products through Mexico. The new policy, introduced by President Biden, mandates that steel imports from Mexico will face a 25% tariff unless the steel is melted and poured in North America. Similarly, aluminum imports must not contain primary aluminum from China, Russia, Belarus, or Iran to avoid a 10% tariff. These measures aim to strengthen North American supply chains and prevent tariff evasion.
The article focuses on the high USD’s negative impacts on other countries. RI observes: The article mentions the impact on our exports but fails to mention the impact on imports, which have a greater trade impact since imports are much larger than exports.
In Arizona and elsewhere, state lawmakers support bills for risk mitigation of supply chain disruptions and possible attacks from China. RI observes: States and companies can use our Geopolitical Risk map and TCO Estimator to decide how to minimize risk from such a conflict affordably.
IMTS 2024 in Review
Harry Moser presented the 2024 National Metalworking Reshoring Award to Joe Gopi, Director of Manufacturing at Sumitomo Drive Technologies.
IMTS 2024 saw the second-highest attendance ever, 89,020, with 1,737 exhibitors displaying 40 million pounds of machinery on 1.2 million square feet of space. The Illinois Governor and some White House officials were also in attendance. There were large numbers of additive manufacturing and robot exhibitors. Most exhibitors felt that business was reasonably good. There was general optimism for improving manufacturing and machine sales in 2025.
The Student Summit was large and professional, with 14,713 attendees. Many major companies had Summit booths in addition to their selling booths. Harry helped develop the first Student Summit in 1998, to attract youth and address the country’s growing skilled workforce needs.
Some other ways Harry kept busy at IMTS:
Greeted reshoring enthusiasts and prospects at the impressive exhibits of sponsors United Grinding and Fives and presented at the Supply Chain Forum. Reshoring was well received.
Met with Kathy Nunnally of leading manufacturing industry search firm, Regions Recruiting. We are planning a reshoring survey. A future newsletter will provide you with a chance to share your insights. If you would like to help distribute the survey to prospective respondents, email Harry.
Had a Media Event/Press Conference. Harry’s PPT is available here. Media who missed the session are encouraged to contact Harry for recent insights.
Hosted the Swiss Ambassador for a tour of leading Swiss company exhibits, including United Grinding, REGO-FIX and Starrag.
The technology exhibited at IMTS is essential for increasing U.S. competitiveness. We have been investing much less than China. Our manufacturing labor productivity has been growing at about 0%/year vs. China’s reported 6%/year. Modern equipment will also help solve the workforce shortage by automating and creating a more exciting tech environment.
It was great to meet with so many attendees, exhibitors and friends. Harry is already looking forward to seeing you at IMTS 2026!
Chairman of the Federal Reserve Jerome Powell’s comments at the National Association of Business Economics (NABE) Annual Conference in Nashville were reported by Bloomberg. The next item on the Conference agenda was a panel led off by the Initiative’s Harry Moser. Harry’s PowerPoint on reshoring and industrial policy, is available here.
The Buzz:
Igniting American Manufacturing with Harry Moser from Reshoring Initiative
A journalist for a major national publication is looking to connect with U.S. firms that buy and depend on Chinese intermediate goods that were exposed to tariffs in 2018; the buyer may have tried to seek tariff exemptions after struggling to source the product elsewhere. If you know of any examples and stories along these lines, please get in touch with Harry Moser so he can let the journalist know.
Businesses in Northeast Michigan can now apply for grants to help cover the cost of employee training through the Going PRO Talent Fund, with up to $2,000 available per employee and $3,500 for each registered apprentice. The program, which supports both new and existing worker training across various industries, aims to boost workforce skills and is a key part of the state's initiative to increase the number of Michiganders with post-secondary credentials.
The Biden administration announced a $244 million boost to the federal government's registered apprenticeship program. The funds are slated to be distributed among 32 states and 52 beneficiaries, to increase higher-paying job opportunities without the need for a college degree. RI observes: The money would be more effective as apprenticeship loans, making apprenticeships more attractive for employers and apprentices.
Why Reshore Reshoring is an efficient way to increase corporate profits, reduce imports and regain manufacturing jobs in the United States. It's also the fastest and most efficient way to strengthen the U.S. economy.
