Reshoring: It’s Going to Happen Anyway
Yesterday at Gardner Publications’ head office in Cincinnati, Ohio, Harry Moser spoke for over an hour to an audience that included manufacturers, manufacturing buyers, and equipment suppliers. His topic was the reshoring of American manufacturing.
Harry Moser explains the Reshoring Initiative's free “Total Cost of Ownership” calculator.
Mr. Moser is the founder of the Reshoring Initiative—an organization that documents the savings from bringing offshored manufacturing work back to the United States, and helps companies to accurately identify and account for those same savings themselves. One of his messages is that many companies offshoring today rely on analyses that overlook subtle but significant costs of sending manufacturing far away. The Initiative offers a free “Total Cost of Ownership” calculator that serves as a tool for a more realistic appraisal of all manufacturing expenses.
However, his speech also gave some interesting arguments for reshoring that went beyond the cost analyses. They include:
- It’s Going to Happen Anyway. The Boston Consulting Group recently published a study of international manufacturing cost factors that sees U.S. manufacturing in an attractive position in the coming years. A senior partner with BCG said, “We expect net labor costs for manufacturing in China and the U.S. to converge by around 2015.” Mr. Moser therefore asks: Why not get in front of the trend by transitioning now to U.S. production?
- You Say You’re Lean, Don’t You? To paraphrase W. Edwards Deming, the essence of lean is to govern operations according to total cost instead of according to up-front pricetags. The case for offshoring is inconsistent with this when it’s based on just the visible pricetags and not the costs that are hidden, Mr. Moser says. Thus, offshoring impedes the effectiveness of companies’ lean transformations, and undermines the validity of their claims to be lean.