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Reshoring Gains Traction in U.S. Manufacturing According to the Reshoring Initiative, an organization that helps manufacturers decide if they can successfully relocate their overseas operations to the U.S., reshoring and FDI (foreign direct investment) job announcements soared in 2017. For the first three quarters of 2017, announcements were up 250 percent from 2016 YTD, representing a gain of nearly 180,000 manufacturing jobs. Over the last 10 years, leaders in the U.S. FDI/reshoring movement include GM` (12,000 jobs), Boeing (7,800 jobs), Toyota (6,000), Mahindra (6,000), Volkswagen (4,000), and Volvo (4,000). In addition, Ford, 02/16/10 Foxconn, Mercedes-Benz, GE, Caterpillar, Polaris, and Intel have each brought back more than 2,000 jobs.
A2Z Metalworker Factors that are accelerating the reshoring movement conditions; 1/3include pagefavorable squaredomestic - 5 3/8economic x 5 3/8" advanced technologies such as automation, robotics, and the Internet of Things; reduced domestic energy costs; the just-lowered corporate tax rate; aggressive tax incentives from various states; as well as increased labor costs overseas.
In particular, the labor cost differential between China and the U.S. has narrowed significantly over the past five years, greatly reducing profits for offshore enterprises. Increased shipping costs further erode the bottom line. Disruption of supply is also a concern with longer supply chains. This is especially true for possible shortages of materials or parts that can only be sourced from a few suppliers, which would have serious impacts on delivery and production schedules. Increasingly, the cost advantage of lower wages overseas is undercut by higher supply chain costs and quality issues.When all these factors are considered together, more U.S. manufacturers are starting to look at the United States as the place to manufacture. “It still takes six weeks to bring a product from China to the U.S., whereas here you have an opportunity to produce that product domestically and get it to the customer in days, instead of weeks,” says John Malloy, CEO for Victaulic, a global pipe and tool manufacturer in Easton, Pa. A2Z MANUFACTURING SW •
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“In fact,” says Harry C. Moser, founder and president of the Reshoring Initiative, “regaining a ‘Made in America’ label is the fourth-most frequently mentioned reason for reshoring, out of the 43 reasons that we track.” Total Cost of Ownership (TCO) The key to successful reshoring is truly understanding, at a deep level, the total cost of ownership (TCO) of your product — the complete cost of every step of making that product overseas and shipping it to the United States. Obvious factors are labor costs, materials, quality and rework, waste, and logistics and shipping. However, “most companies make sourcing decisions based solely on price, often resulting in a 20 to 30 percent miscalculation of actual offshoring costs,” states Moser. Other factors — overhead, balance sheet, risks, corporate strategy, and other external and internal business components — must also be considered to determine the true total cost of ownership. The Reshoring Initiative has made it easier for companies to accurately determine TCO with a free online TCO estimator that helps determine these cost factors, allowing company leaders to make informed decisions regarding sourcing and reshoring, or winning bids against offshore competitors. The Tax Advantage The U.S. corporate tax climate is more favorable now than it has been in decades, thanks to the Trump administration’s Tax Cuts and Jobs Act, which cuts the corporate tax rate from 35 percent to 21 percent, the lowest rate since 1939. The legislation also eliminates the corporate alternative minimum tax (AMT), which prohibited companies from deducting research and development costs, or capital investments in low-income neighborhoods. When coupled with competitive state tax credits and incentives, the new tax climate makes reshoring look even more attractive. Souirce: PMA Feature, By: Mark Crawford
Airbus Eyes Ever Higher Production Rates Airbus is studying a further increase in production of single-aisle aircraft as the