May 21, 2019

May 2019 eNewsletter

May 2019 E-News: Production Leaves China While U.S. Reshoring Cases Increase by 38%

According to the Reshoring Initiative 2018 Data Report, more than 145,000 new manufacturing jobs were announced in 2018 as a result of reshoring and FDI (foreign direct investment) – making it the second-highest annual total in history. Additionally, individual cases of reshoring and FDI were up by 38% compared to 2017 and by 1,400% over 2010.  These results are consistent with recent reports of companies leaving China or planning their departures. You can help accelerate the trend in 2019. See Amerimold and the free webinar in Upcoming Events, below.

Monthly Focus: Highlights from the 2018 Data Report
  • Reshoring and FDI have driven 31% of the total increase in U.S. manufacturing jobs since 2010 and 3.3% of total U.S. manufacturing employment as of 12/31/18.
  • Reshoring from China accounts for 59% of all reshoring.
  • Although China topped Germany for the greatest number of FDI jobs announced since 2010, China announced 12% fewer in 2018 than in 2017.
  • Quality, freight cost and total cost make up the top offshore drivers of the trend.
  • Proximity to market, supply chain optimization, higher productivity, skilled workforce, and brand image/made in USA serve as the top domestic drivers.

See the full report.

Monthly Focus: Highlights from the 2018 Data Report

Cut & Sew Manufacturers Award:
Unionwear is a leading manufacturer and supplier of made-in-USA hats, bags and binders for dozens of global brands that previously sourced in China. Unionwear’s reshoring initiatives have included re-engineering and re-designing reshored products, generating more than 70 additional jobs in the U.S. and over $4 million in annual revenue. See podcast on Unionwear’s story here.

Textile Award:
Contempora Fabrics is an established manufacturer of all types of circular knits used in fashion, athletic and performance garments trending in the U.S. today. Walmart’s commitment to purchase by 2023 an additional $250 billion in products made, sourced, or grown in the U.S. drove Contempora’s reshoring initiative. Contempora supplied the fabric for employee vests used in all Walmart U.S. stores, generating over $13 million in sales in the U.S. during a five-year period.

Brand Award:
With environmental impact in mind, Mara Hoffman designs and manufactures garments from responsibly sourced organic, recycled and regenerated materials whenever possible. In 2015, the company moved textile printing and cut and sew back to the U.S., gaining better transparency in its supply chain and providing jobs for its community in NYC.

Left: Cut & Sew winner: Mitch Cahn, President, Unionwear with Harry Moser. Right: Will Duncan, Exec. Director, SEAMS with Textile winner Contempora Fabrics team members Ron Roach, President, Alex Whitley, VP Sales, Chase Johnson, and Harry Moser of Reshoring Initiative.

In the News

China’s manufacturing glory wanes The chickens finally have come home to roost! With a trade war raging, offshore wages rising and recognition of costs increasing, offshoring no longer offers the go-to option for cost reduction. Instead, companies are realizing that optimizing supply chains via greater localization minimizes risk and reduces costs. The reports below highlight a series of factors that explain why companies are reducing offshore production, and, in particular, leaving China, the source of 59% of reshoring.

One Trump Victory: Companies Rethink China. Companies are moving to reduce their dependence on Chinese factories to make the world’s goods. "There is not much of a difference between the costs in China and the United States," said Kim Fausing, CEO of Denmark's Danfoss Engineering. "You have to have a very good case today to justify producing something in China and shipping it to the U.S." Although the Trump administration has touted jobs as the primary incentive for reshoring, companies also see decoupling from China as a way to minimize financial, national security and IP risk.

Southeast Asia may not be the next ‘factory of the world’ even as production moves away from China. Sixty percent of American multinationals are ready to move production closer to their end markets, according to a Bain & Company study. That study also predicts thatproduction of goods for non-Chinese consumers will move closer to their target markets.

Taiwan Tech Homeward Bound from China. Rising labor costs, individual censorship, environment taxes and social welfare costs have prompted 40 Taiwanese companies to invest $6B to move manufacturing back to Taiwan from China. "It's not so much about Trump, but about Xi Jinping," who is seen as creating a bad business environment.

Asia-to-North America trades see capacity sink. The Bluewater Reporting World Liner Supply (WLS) Report found that Asia-to-West Coast North America trade capacity declined 6.81% between Q4 2018 and Q1 2019. The report further suggests that "the reduction in demand has caused a decrease in capacity and shows that the tariffs are beginning to have their intended consequences."

The DHL Resilience360 report examines last year's major supply chain challenges and identifies trends that will shape the risk landscape in 2019, including recalls and safety scares, pollution fees, border delays and more.

NABE Business Condition Survey offers some eye-opening perspectives on upcoming reshoring activity.

  • 40 percent of NABE members plan to open new domestic facilities within the next five years.
  • Only 14% of Corporate Survey respondents plan to open new foreign facilities within five years. A quarter of those new foreign facilities are slated for Western Europe and a fifth for Mexico. Just 13% say they have plans to open new Asian facilities, down from 27% in the 2016 survey.
  • When it comes to expansion plans, 43% of the respondents say they will expand a domestic facility within the next five years. Nearly 90 % have no plans to expand foreign facilities.
  • More than 80% of corporate respondents have no plans to relocate an existing facility within the next five years. Of those that do have relocation plans, more than 60% will relocate domestically, with just 4% moving to an offshore or near-shore location.

Don’t Count on U.S.-China Trade Relations Warming Up Anytime Soon. The author of this article from Bloomberg reports that "Even those soft on China support tariffs now, even those that opposed them in the past. America should increase tariffs on China going forward. Today, those who’ve long worried about China’s policies are empowered to speak up." According to former Treasury Secretary Hank Paulson, "…politicians on both sides are actually applauding for tariffs—something, quite frankly, I never believed I’d see." And Scott Kennedy, a China expert at the Center for Strategic and International Studies states, "Xi Jinping is a hawk…and the lesson he draws is: Prepare for long-term hostility."


Reshoring Initiative in the News

Assembly MagazineMade in USA: Turning preference into purchases (part 2)

American Express"Reshoring" Considerations for SMEs

Forbes: "Manufacturing Has Been Booming, And Now There Will Be A Big Convention To Celebrate It"

Upcoming Events

May 22 – Free Webinar: How to Select the Best Location for Serving the US Market, Biggins Lacy Shapiro & Co./Reshoring Initiative, 11am ET

June 3-4 – SUR/FIN 2019 (Rosemont, IL)

June 10-12 – SelectUSA Investment Summit (Washington, DC): SelectUSA now enables reshoring as well as FDI (foreign direct investment).

June 13 – Amerimold Sourcing Fair (Rosemont, IL) Attend the first-ever Sourcing Fair within Amerimold. Exhibitors receive a free booth to seek North American molders and/or moldmakers among Amerimold attendees. Register here. Or, you can attend Amerimold and offer molds and molding to the Sourcing Fair exhibitors.

October 3 – Made in America 2019 (Indianapolis, IN): This historic 800-exhibitor B2C and B2B show will help bring manufacturing back home. Attendees will include industrial professionals, industry leaders, keynote speakers, policymakers and legislators.

October 13-16th – IEDC Annual Conference (Indianapolis, IN)

Thanks to all our readers, sponsors and companies who use the Total Cost of Ownership Estimator®. Your participation makes more reshoring possible.
Reshoring Initiative

Harry Moser, Founder & President, Reshoring Initiative, (847) 867-1144
Millar Kelley, Newsletter Editor & Research Analyst
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