26Jul

Manufacturing Roundtable Update on Reshoring – Fairfield, NJ

7-19-16

Last week I was invited to a Manufacturing Roundtable in Fairfield NJ that was held by the Commerce and Industry Association of NJ (CIANJ).

The mission of the Commerce and Industry Association is to be the leader in free enterprise advocacy for the purpose of fostering, through education, legislative vigilance and membership interaction, an economic climate that enhances business potential and makes New Jersey a better state in which to live, work and conduct business.

The meeting started with a plant tour at Brewster Washers and then we walked a few doors to the Cricket Hill Brewery for some fine tasting craft beers made locally on site.

Brewster Washers is a 97 year old company in the business of making specialty washers for high tech industries.  The tour was very informative and the management team are committed to achieving 100 years in business in a few years.

Cricket Hill Brewery is a complete brewery from milling of the grains to bottling the beer in a specialty bottling machine on site.  They offer a selection of 12 different drafts brews and if you enjoy them you are able to purchase them as six packs or in cases for home consumption.

At the Brewery, Sandy Montalbano D’Amico from the Reshoring Initiative® gave the attendees of 70 people a presentation on the facts of what is happening in the US regarding the trend of manufacturing towards bringing products back to the US from foreign producers.

The Reshoring Initiative, founded in early 2010, takes action by helping manufacturers realize that local production, in some cases, reduces their total cost of ownership of purchased parts and tooling. The Initiative also trains suppliers how to effectively meet the needs of their local customers, giving the suppliers the tools to sell against lower priced offshore competitors.

Sandy’s presentation was excellent and she described the reasons offshoring occurred in the first place, and also provided how many companies use flawed economic models to determine whether to purchase offshore or in the US.  Many companies have the “herd” mentality when it came to sending products offshore since it was in vogue 10-15 years ago and they tended to ignore indirect costs of purchasing foreign parts such as freight and inventory control.

There is a new trend occurring in the US now and parts are starting to return to the US, or new products are not leaving the US as quickly as they have in the past.  This is due to a few shifts in cost such as higher wages in China, the increased use of the total cost of ownership, the value of inventories for safety stock, and the valuation of the China currency vs the US dollar.

In fact in a recent survey of US manufacturing companies the top five reasons not to offshore is:

  • Quality/rework/warranty issues
  • Freight costs
  • Rising wages
  • Total cost of ownership is now being evaluated
  • Delivery flexibility issues with offshore

The Reshoring Initiative has a few objectives that are very commendable:

  • Balance the $500 billion trade deficit
  • Increase manufacturing jobs by 4 million in the US
  • Cut the US budget by about 50%
  • Strengthen the middle class with better paying jobs
  • Increase manufacturing in the US by 30%

For more information on the Reshoring Initiative you can visit the website http://www.reshorenow.org  and review the details of what is happening, cases of products brought back to the US, and how you can use the Total Cost of Ownership calculator on this site.

The Total Cost of Ownership (TCO) Estimator is a free online tool that helps companies account for all relevant factors — overhead, balance sheet, risks, corporate strategy and other external and internal business considerations — to determine the true total cost of ownership. Using this information, companies can better evaluate sourcing, identify alternatives and even make a case when selling against offshore competitors.

The North American Die Casting Association has a checklist that alerts US companies to hidden costs of offshoring products.  We have had this list on our website for years and I had blogged about it three years ago to increase awareness to the risks of offshoring die castings.

The list is called can be found here: 14 Reasons to Buy American.

Premier utilizes state of the art equipment in manufacturing high pressure aluminum die castings such as Kawasaki robots, VisiTrak process monitoring systems, Mokon die temperature control systems, vacuum die casting, and a central lubrication system for the die spray.

If you have any parts you would like Premier to review, please contact us online or  send your drawings or electronic files to lc@diecasting.com.

 

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