Operational efficiency has replaced reducing costs as #1 priority.
Corporate social responsibility rated highly, up dramatically from 2019.
32% said they are losing revenue due to supply shortages.
Politics
The Bill That Could Truly, Actually Bring Back U.S. Manufacturing. And help the climate, too. One piece of the puzzle is highlighted here: “The U.S. doesn’t have a high-end manufacturing sector because nobody will finance one. …Recently industrial policy has become more popular across parties—Senator Marco Rubio, a Republican, hasspoken favorablyof it—and now a group of moderate Democratic senators, led by Senator Chris Coons of Delaware, has proposedchartering an Industrial Finance Corporation, a bank owned by the U.S. government that would fill the “manufacturing gap” and finance high-tech production nationwide. We are not opposed to the concept, but it is clearly not sufficient to achieve the objective of bringing back U.S. manufacturing. The key is to get U.S. manufacturing cost lower by shifting to a training system like Germany’s and some combination of a lower USD, low corporate income tax rates and a value added tax (VAT). When costs are competitive and factories are busy, companies will be able to justify borrowing at commercial rates to fund needed investments.
There's no one fix to bring "Made in America" back to what it once was.
It would take about a decade of concerted investment to graduate people with the right skills, certificates, training or degrees necessary to build back American manufacturing capability.
It'll also take years to shift supply chains currently focused on bringing parts into and out of Asia. "As we bring the manufacturing back, we'll put more people into those jobs, and then we'll have all that expertise," Harry Moser says.
The U.S. government also needs to carefully impose tariffs and value-added taxes to "take the tilt out of the playing field." The U.S. is one of the few countries without a 15% value-added tax on imports.
Failures’ Fallout: Predicting Politics & Policy in the Post-Pandemic EraOne of the most effective lobbying firms in Washington, DC, Mehlman Castagnetti’s bipartisan team helps clients develop and implement winning advocacy strategies and navigate policy battles taking place in Congress, the White House, and regulatory agencies. The projections on their infographic, below, show forces shifting from supporting offshoring to favoring reshoring. We especially agree on: tech overcoming our wage disadvantages; the China decoupling threat; consumers preferring local products; including employees, suppliers and community as stakeholders; and recognition of the importance of national self-sufficiency. We disagree on one item. Offshoring does not improve “efficiency,” it reduces factory price. Efficiency is output per unit of input, e.g. labor or energy. Offshoring uses much more labor since productivity is lower in most countries. Offshoring requires much further shipment of products, increasing energy usage. From a green perspective, offshoring is much worse for the climate. We might also reverse the column headings, taking the longer-term perspective. Since U.S. supply chains will be strengthened by the 2020 conditions, we would call them “Tailwinds.”
China and Asia: Weak Links in the Global Supply Chain
Chinese Factories Are Having Labor Pains—‘We Can Hardly Find Any Workers’ Demographics, fear of Covid-19 and youths’ changing priorities leave factory owners in a pinch. China’s trends parallel most of the world. Fifty years ago, U.S. youth started to prefer university to manufacturing. Around 2005, at an ISTMA (International Special Tooling and Machining Association) meeting, Harry Moser heard the same complaint from a broad range of developed and developing countries, “All of our youth want to go to university instead of into apprenticeships.” The U.S. is making skilled workforce training progress and the international bar is getting lower. Good news!
Beijing cancelled 531 flights (43%) of the daily total (Aug 2021)
Rate spikes via lost shipping capacity
Container ship stuck in the Suez Canal
Port lockdowns via COVID quarantine measures
U.S. Department of Transportation reinstated a 150-flight annual quota on charter flights from China’s two primary economic zones (8/1/2021). The quota was suspended in 2020.
2021 National Metalworking Reshoring Award Announced Acme Alliance, a leading die caster in Northbrook, Illinois, was announced as the 2021 winner on Tuesday, September 14 at FABTECH. More details will be available in the November e-Newsletter. There is still time to reshore and apply for the 2022 Award.
2021 Sewn Products National Reshoring Award Announced Venus Group of Fort Lawn, SC won in the Cut & Sew (contract manufacturing) category. Soft-Tex of Waterford, NY won in the Brand category. Both winners were announced on September 17 at the SEAMS Annual Networking Conference in Myrtle Beach, SC. More details will be available in the November e-Newsletter, including information about the 2022 Award.
Reshoring the Supply Chain, Edge-Computing StyleEmerging tech can help break down the vast centralized supply chains we see today. “Reimagining supply chains for the digital age, however, isn’t simply a question of rerouting cargo ships or redesigning trucking schedules. Rather, the goal is to break down the vast centralized supply chains we see today and relocate them to “the edge.” That concept, borrowed from edge computing, would see companies shift away from the practice of shipping raw materials and parts around the globe and instead moving supply chains—and the factories they support—closer to consumers and end users,” reducing risk and lowering emissions.
Indian auto part makers want Tesla's entry to benefit local companiesThe Indian government may mandate that electric vehicles (EVs) to be sold in India must be manufactured in India, following China’s lead. If domestic production of EVs and all of their components is good for other nations, why not for the US?
Manufacturing's Ego Problem US companies, large and small, neither understand foreign competitors nor take them seriously, says author Rebecca Morgan. “Too many manufacturers look to purchasing only to reduce supplier purchase order prices. That misses all the opportunities within supply chain strategy and activities to increase profitability. Once again, standard costing leads to poor decision making. Supply chain professionals should be on top of evolving technologies and materials, as well as operational realities, to recognize and leverage opportunities. Manufacturers that design their businesses for profitability realize these investments are not optional. Sourcing should always consider potential impact on internal and supply chain risks, ensuring increasing value to the customer, not only component or material purchase order price.”
We have developed programs to help companies, MEPs, EDOs and Governments increase domestic production and sourcing. Click on the links and/or contact us.
The Reshoring Initiative seeks volunteers to help enable reshoring. We are looking for several experienced manufacturers to commit 5 or 10 hours per week for at least a few months. Helpful qualifications include Microsoft Excel competence, general manufacturing knowledge and comfort talking to other manufacturers by phone or via Zoom. Successful volunteer work could lead to paid part-time contract work.
Thanks to all our readers, oursponsors and the companies who use TCO to reshore.
