May 17, 2011    Volume 18, No. 8

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Organizers Launch State Manufacturing 'Reshoring' Initiatives


By Richard McCormack

A new nationwide initiative is underway to convince companies that it is worth bringing manufacturing back to the United States. Illinois is the first state in the country to start a "Reshoring Initiative" aimed at large OEMs to re-open factories in America. Backers hope to create similar chapters in Michigan, Indiana, Ohio, Pennsylvania, New York and California.

Leading the charge is Harry Moser, a charismatic, straight-talking former CEO of a major U.S. manufacturing technology supplier who has received financial backing from major trade associations and companies. Moser, who headed the U.S. subsidiary of AgieCharmilles, the Swiss-based precision machine tool company, has created a non-profit "Reshoring Initiative" in partnership with the Association for Manufacturing Technology, the National Tooling and Machining Association, the Association for Manufacturing Excellence, the Swiss Machine Tool Society, Big Kaiser Precision Tooling Inc. and Sescoi USA, a leader in advanced manufacturing software. About 25 other groups have allied recently with Moser's initiative.

Sponsors are providing "meaningful money" to get the effort underway, says Moser, who is busy traveling the country giving speeches at major conferences on the financial benefits for companies that reshore their production.

"Instead of sending out [educational] material and hoping somebody will use it without a chance for follow up, we're creating the Illinois Initiative to work with actual Chicago companies, their supply chain managers and their suppliers" to have them get trained on the group's "total cost of ownership" spreadsheet program, says Moser. "If we go to Caterpillar and say how about re-evaluating bringing work back for the sake of the country, they will say, 'Let Boeing do it.' But if I say, 'Do it for Illinois, your family and your kids' future,' it grabs them a lot better."

The Reshoring Initiative has received interest from the federal Manufacturing Extension Partnership and the Commerce Department's Economic Development Administration. "The challenge is to get Obama open to these ideas," says Moser. Obama's Council on Jobs and Competitiveness, which has held only one meeting since its creation on January 21, is considering the same tired solutions that have been proposed by Democrats, Republicans and business people for the past 20 years: cutting regulations and taxes, improving education and "leveling the playing field." None of it has worked and likely won't, says Moser.

"That is a zero sum game of taking it out of one pocket and putting it in another," he notes. "Whereas with reshoring, we take it out of the Chinese pocket, which already took it out of our pocket, which makes the pie bigger, which means it isn't a zero sum game. You don't have to wait for someone from Washington to make a decision on currency, and then nothing ever happens."

When Moser gives presentations on reshoring, he will often be asked why he doesn't approach the problem by working on forcing China to float its currency, "And I say: 'Because I can't. Our government might be able to do that and I support it, but I can't make it happen.' "

Moser and his partners are trying to get manufacturers and their suppliers to use the total cost of ownership software estimator the Reshoring Initiative has developed to compare the China price to the U.S. price, including an estimation of risks. If Moser can get companies to run the data, what they usually find is that Chinese costs are 30 percent below those of a U.S.-made product, but once the total cost of ownership is included, that gap can almost be eliminated.

There are major global supply chain problems that are beginning to impact sourcing decisions, he points out: natural disasters like the one in Japan; political instability; rapidly rising foreign wages; U.S. currency depreciation; high oil prices; the loss of intellectual property; and lack of legal protections offshore. Companies are also not considering such costs as emergency airfreight, travel, poor quality, packing and unpacking, language problems, pirates, long lead times and the loss of innovation capability. Offshoring also leads to the commoditization of products and the creation of low-cost competitors; whereas reshoring could help with differentiation and mass customization.

The benefits of globalization are now being questioned, says Moser. Offshoring is leading to higher U.S. unemployment and lower consumer spending. Moser hopes the Reshoring Initiative becomes the "national source of actionable information on the size, motivation and decision processes of U.S. offshoring and reshoring." Information on joining the initiative is located at www.reshorenow.org. The Midwest chapter, headed by Moser, Mohammed Faheem and Rand Haas, has a website: www.midwestreshoring.org. Call Moser at 847-726-2975 or harry.moser@comcast.net.


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