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Manufacturing May Be Coming Back to the U.S., Long-Term

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Making Cadillacs in Lansing, Michigan. (Image credit: Getty Images via @daylife)

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Forbes Leadership Forum, Contributor
(This article is by Robert McCutcheon, the U.S. industrial products leader of PwC.)
A number of signs, beyond the current cyclical recovery in domestic manufacturing, suggest that the U.S. may be entering a longer-term manufacturing resurgence. People have long worried about the nation’s relatively high labor costs and challenges in competing with developing markets, particularly in Asia and Latin America, but after decades of manufacturing migration overseas, the tide may be turning.
That’s not only because of the nation’s improving labor cost competitiveness. Economists have noted that China’s labor costs are rising, affecting its manufacturing profits. Yet the overall cost premium, based on the difference in absolute wages between the U.S. and China, is actually expanding, so labor arbitrage involving China and other low labor cost markets will likely persist. The real news is that a range of structural changes are emerging that could drive a U.S. manufacturing renaissance. A sustained manufacturing rebound could lead to potentially improving investment, employment, production output and research and development.

PwC’s recent report A Homecoming for U.S. Manufacturing? evaluates the key factors that may lead to the U.S. becoming a more attractive manufacturing location. Many manufacturers are increasingly reevaluating their U.S. strategies, such as their separation of R&D and production, and their production abroad and importation back to U.S. buyers. Depending on the industry, they may find considerable benefits in establishing regionalized supply chains and R&D facilities in the U.S., including reducing costs, shortening lead times, protecting intellectual property, and avoiding many of the risk factors of developing markets. Localizing production can help reduce supply chain disruptions that cost American industrial manufacturers $2.2 billion last year, according to the PwC report. Bringing manufacturing production back to the U.S. generally holds greater advantage for some industries than others. Taking into account labor, materials, transportation, and energy costs, the chemicals, primary metals, and heavy equipment manufacturing industries stand to benefit most from maintaining or expanding facilities in the U.S. Companies in wood, plastic, and rubber products could also benefit significantly, but their lower net imports might limit their benefits from on-shoring.

The bull market in energy commodities has driven up transportation costs for manufacturers with global supply chains, leading some machinery companies to produce more in the U.S. for sale in North America. If transportation costs remain elevated, perhaps because of growing global demand for energy, production closer to home may grow more attractive. Also, it can cut down on lead times, reduce inventory levels, diminish some currency risks, increase control over intellectual property, and reduce supply chain disruption risks. In addition, progress in extracting natural gas from shale has created new opportunities for manufacturers in several industries, particularly chemicals and metals, thanks to more affordable energy and greater downstream demand.

Also, manufacturers are increasingly concerned about currency fluctuations.  The depreciation of the dollar and rise of China’s currency has narrowed the cost gap between producing domestically and importing from China for domestic consumption. Moreover, the long-term decline in the dollar helps make the U.S. a potentially more competitive location for manufacturing for export, and there has been strong growth in the exports of goods since the end of the recession. The appreciation of the yuan relative to the U.S. dollar may continue longer-term as China’s economy grows, which could further help U.S. manufacturers.

U.S. demand remains supreme. Although China and other emerging markets are expected to keep having faster gross domestic product growth than the U.S., our advantage in wealth, in real GDP per capita, is expected to persist, dwarfing China and other emerging markets. This difference in  standard of living, as well as the size of the U.S. market, supports investment in the domestic production of goods targeted for U.S. consumption.  In addition, the U.S. labor force remains strong.

As for the availability of capital, although credit standards aren’t at the levels reached during the financial crisis, banks have resumed tightening their credit requirements. Borrowing in China and has become more difficult, too, though, so manufacturers may shy away from longer supply chains and the risks they carry, including getting inventory stuck in transit, particularly in industries with short product cycles or high spoilage.

The U.S. has the highest statutory corporate tax rate among developed countries. This has spurred talk of tax reform to boost economic growth and employment. Proposals include a lower statutory rate, tax incentives, and extending or making permanent the R&D tax credit. However, the tax and regulatory environments do bring uncertainty to the expansion of domestic manufacturing.

All these considerations, as well as labor costs, are affecting manufacturers’ decisions whether to establish production facilities in the U.S., closer to their domestic customers. Can we expect an increase in re-shoring as a result? Will “Made in USA” become more common? Only time will tell, but a wide range of signals now suggest a potential renaissance of the U.S. manufacturing sector.

SOURCE: Forbes

Call Me Maybe – 2012 CT Manufacturers

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Employees from several Connecticut manufacturing companies around the state have a little fun on the job and spoof a popular song in honor of manufacturing month (October).

America's Manufacturing Crisis: Finally Harvard Gets It

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Truth: better late than never. (Photo credit: Wikipedia)

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Some of us have long argued that the United States has been committing economic suicide by letting its once-peerless manufacturing base fade away. To those who have investigated the facts, the case has, for decades, seemed unchallengeable.
Yet it has received virtually no support from the American scholarly establishment. Now finally academe seems to be waking up.  At least that is how I read the forthcoming publication of Producing Prosperity: Why America Needs a Manufacturing Renaissance. Written by  Harvard  management professors Gary P. Pisano and Willy C. Shih, and endorsed by former Harvard president (and noted economist) Larry Summers, the book argues that if a nation loses its manufacturing industries, it loses its ability to innovate. That is hardly the strongest case that can be made for manufacturing  – there are much more compelling and direct arguments concerning exports,  jobs, wages, and a nation’s ability to pay its way in the world — but at least the academic establishment has now  finally been engaged.

The only previous serious academic treatment I can remember was Manufacturing Matters by the Berkeley economist Stephen S. Cohen and his political scientist colleague John Zysman. Written as far back as 1987, this was an inspired  book but precisely because it was so early,  it was forgotten long before the future problems the authors so presciently identified became universally obvious.

Why is manufacturing so important? In  my book In Praise of Hard Industries: Why Manufacturing, Not the Information Economy, Is the Key to Future Prosperity in 1999, I made three points:

1. Jobs. Manufacturing creates a much better mix of jobs than advanced services — jobs for everyone from ordinary blue collar workers to capable  engineers, brilliant scientists, and resourceful and far-sighted top managers.

2. Wages. Those who in the 1970s began dismissing America’s manufacturing base as the “Rust Belt” displayed deep ignorance of modern First World manufacturing. Such manufacturing has long been highly capital-intensive, which means that each worker’s productivity is greatly leveraged by sophisticated production machinery. This creates plenty of room for employers to pay high wages. Advanced manufacturers moreover require great accumulations of secret production knowhow – typically knowhow acquired over generations of “learning by doing” – and this powerfully shields them from low-wage foreign competition.

3. Exports. I have calculated that, per unit of output, manufacturing businesses are nearly ten times stronger exporters on average than services. Thus America’s investment in postindustrial activities (such as computer software, internet development, finance, and legal services) cannot  hope to bridge the trade gap opened up by the decline of manufacturing. One reason for manufacturing’s superior export prowess is that manufactured products generally require little adaptation to sell around the world. By contrast services have either to be performed in a customer’s home country or at least – in the case of computer software, for instance – have to be expensively adapted to meet different cultural needs in different  foreign markets. Thus the net receipts transmitted back to the United States are often minimal.

What explains the American establishment’s complacency in the face of the near collapse of the national manufacturing base? The answer is mainly a misplaced faith in  laissez-faire.  American opinion leaders have trusted to the theory  that if a factory closes, this is dictated by the “wisdom of the market.” In reality free markets have next to nothing to do with it. American manufacturers are competing in a globalized marketplace that is comprehensively rigged to hollow them out. If other advanced nations protect their domestic markets (Japan and Germany come to mind in the case of car industry, for instance) , their home producers enjoy greatly enhanced retained profits to plough back into improving their production technologies. After five decades of such unequal trade, this begins to add up. It is hardly surprising that Japan and Germany are now the leaders not only in cars but all sorts of advanced producers’ goods that once defined American leadership of the world economy.

As for the Pisano/Shih book, detailed comment must await its official publication later this month. In the meantime Pisano is making an appearance at a reception in Washington tomorrow hosted by, among others, the Kearny Alliance and Asia Policy Point at the offices of the King & Spalding law firm.

The key question is what America should do. Judging by the Amazon.com page for the book, the Pisano/Shih answer is a bromidical call to government and business to work more closely together on basic and applied research. This is little more than hot air and will do nothing to address the real issue, which is an unfair world  trade system. The fact is that almost as soon as American corporations  invent new, more efficient production  technologies, they come under pressure from foreign governments to transfer these  out of the United States. If they don’t do so, they face non-tariff barriers in the foreign markets concerned. By definition, given their single-minded focus on profits (and their acknowledged lack of concern  for the American job base and wider national interest), they cave. They suffer no penalty for doing so. Quite the reverse: they improve their access to key foreign markets while they can continue, of course, to sell unhindered into the American market. This sort of economic blackmail has been taken to a high art by China in particular, with results that are now redefining the world’s future.  Virtually every major American corporation has been persuaded — often under duress — to transfer key production technologies to China. Just some of the more notable names include General Electric,  Ford, General Motors, and Motorola. Ultimately the fault does not lie with these companies. Rather they are creatures of an economic environment that was wished upon them by others — not least generations of Ivy League economists who thought that free trade and the resulting move to postindustrial services would bolster American competitiveness.

SOURCE: Forbes

MFGpartners 'Buy American Movement' Meets Washington Precision Machine Shops

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PRLog
October 3, 2012
Dozens of manufacturers & businesses across the Evergreen State unites as one to promote a movement geared to ‘Buy America Back’ says ILG
Spokane, Washington – Companies across the state of Washington and throughout the pacific Northwest are increasingly speaking of a national small business-driven, non-political grassroots movement pioneered by the American Machine Shops Network according to the Industrial Leaders Group. AMSN spokesman Andre Gagne is calling it a revolution within the manufacturing community with the manufacturers, job shops and entrepreneurs across the Evergreen state helping to lead the way all in effort to bring work back to U.S. businesses and employment back to Americans.

Gagne, a 25 year veteran in made-to-order metal and plastic parts and publisher of  numerous technical articles related to product design, lean manufacturing, CNC machining and other processes said AMSN is actively reaching out to companies in Seattle, Spokane, Bellevue, Vancouver, Tacoma, Everett, Yakima, Bellingham, Kent, Everett, Federal Way and across the Evergreen State to join in its job creation ‘Buy American’ campaign founded to help increase the global competitiveness of U.S. Manufacturers.

“Whether it be precision metal machining, CNC grinding, lapping, honing, tool making, OD/ID grinding, sheet metal work, custom fabrication, mold-making, CAD/CAM design, prototyping, tool repair, machine rebuild, or any other manufacturing need, companies nationwide and beyond continue to return to MFGpartners.net to explore and compare US-based vendors capable of providing such solutions,” said Gagne. He continued, “AMSN is pleased to gain the trust and support of businesses throughout the state of Washington, and will remain committed to the movement pioneered by its founder (Don LaBelle) to buy America back and once again be proud to say Made-In-USA.”

About MFGpartners / AMSN

MFGpartners.net is owned and operated by American Machine Shops Network (AMSN). The company specializes in promoting US-based manufacturers of machined parts, fabricated components, precision products and molds. AMSN is the largest network of custom manufacturers in the USA designed to help companies, engineers and others find the most suitable vendors specializing in CNC machining, fabrication, molding, prototyping and other contract manufacturing services.

SOURCE: PRLog

Manufacturing Matters – 1st National Manufacturing Day

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Richard Lord
October 4, 2012

Today is the first national Manufacturing Day, reminding us that the United States still leads the world in production of manufactured goods, and that the manufacturing sector is at the core of our economy.
Manufacturing activity is coming back from the recession, and may also be coming back from overseas. The 2012 U.S. Re-shoring Survey by the MIT Forum for Supply Chain Innovation finds that manufacturers are reconsidering their supply chain strategies due to higher labor costs in developing countries, energy costs and political stability issues, as well as time-to-market concerns. Re-shoring — bringing manufacturing back to the U.S. — is under consideration by a significant number of firms, and some, including auto parts and electrical equipment manufacturers, have moved operations back. The survey finds that federal and state policies, including corporate tax rates, have a major impact on decisions to move or stay.

Here in Massachusetts, “manufacturing is alive and well, and has a healthy future,” according to a recent report, “Staying Power II: A Report Card on Manufacturing in Massachusetts,” by professor Barry Bluestone and his team at Northeastern University.

Some of its key findings about Massachusetts manufacturing today:

Manufacturing employment has stabilized after a sharp decline in the recession

Manufacturing is the state’s six-largest employment sector — and the second-largest (after health care) in terms of payroll

Manufacturing’s share of gross state product has risen for the past two years, to 12.2 percent

The number of manufacturing firms actually increased in 2011, for the first time in decades

Manufacturing is more technologically intense than ever; in 1970 employment in low-tech sectors was twice that in high-tech, in 2006 they were equal, and by 2010 high-tech was 27 percent larger

Most Massachusetts manufacturing companies are small, and most are family-owned

The manufacturing workforce is more diverse than the overall state workforce

Although most jobs in manufacturing are now “white collar,” only about one position in five requires a college degree

While cost issues and global competition are challenges, the study finds, the skills and work ethic of the state’s workforce are powerful reasons to stay in Massachusetts. But employers are already experiencing difficulty in hiring skilled workers, and an upcoming wave of retirements will create up to 100,000 job vacancies over the next 10 years. The 70 percent of manufacturing firms foreseeing expansion of employment in the state over the next five years must face up to this “recruitment challenge” by focusing on workforce development and promoting manufacturing careers.

In this election year, candidates across the country, from President Obama and Governor Romney on down, have jumped onto the manufacturing bandwagon. Beacon Hill has cut the corporate excise tax, passed bills to control medical and energy costs, strengthened the Workforce Training Fund Program and the community colleges, and created the industry-led Massachusetts Advanced Manufacturing Collaborative. Nationally, however, the reality has been not bipartisan consensus but partisan deadlock.

If Congress really cares about manufacturing, there are issues that demand immediate action. Most urgent is heading off about $500 billion in tax increases that will hit the U.S. economy on January 1, along with huge automatic spending cuts. The top tax rate on dividends will almost triple, the top tax rate on capital gains will increase by more than half, and many small and mid-size manufacturers will see their top marginal tax rate rise, because nearly 70 percent of manufacturers file taxes at individual rates. The Research and Development tax credit expired for the 15th time at the end of 2011. And the U.S. corporate tax rate is the highest in the developed world. Action in other areas is equally vital, if less pressing; for example, the future of workforce development programs, largely shaped by federal policy, remains up in the air.

America’s manufacturing sector, historically the backbone of our economy and of upward mobility in our society, is entering a period of renewed opportunity. We need congressional action, now, to ensure that future expansion takes place here rather that abroad.

Richard Lord is president and CEO of Associated Industries of Massachusetts headquartered in Boston.

SOURCE:  The Salem News

'Made in the U.S.A.' Has Unexpected Cachet

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Photo Credit: TruckPR

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Jeremy Quittner
October 3, 2012
Bucking a 30-year trend, more and more small businesses are manufacturing in the U.S., and exporting products abroad. The New York area leads the way.
For Lumitec, a lighting product company in Delray Beach, Florida, manufacturing in the U.S. is essential, but so is exporting to clients overseas.

Lumitec’s products, which are designed for extreme environments, require exact specifications that need frequent product monitoring. So the lag time to make changes typically associated with manufacturing thousands of miles away in China is not an option. To accommodate these needs, Lumitec’s headquarters are in a 10,000-square foot facility that can handle the customization and assembly that clients require.

Lumitec is like an increasing number of small companies that are manufacturing in the United States, and bucking a 30-year trend of outsourcing such production overseas.

These companies find increased control, quality, and production standards domestically that may cancel out the cost savings that could come with manufacturing overseas. They are also turning the table on recent history in other ways, by exploiting sales in international markets, and uncovering opportunities by selling their goods to other countries in addition to domestically. They find the ‘Made in the U.S.A.’ stamp brings them unexpected cachet.

“We attend trade shows outside of the U.S. and people are always pleasantly surprised that we manufacture in the U.S.,” says John Kujawa, chief executive of Lumitec, which exports its lighting products to more than 30 countries. “it is understood that many products manufactured in the U.S. are greater quality than those from certain other countries.”

Manufacturing businesses have added 500,000 jobs in the United States since 2009, though the sector has a lot of ground to make up, having lost 2.3 million jobs since the start of the recession. States that led the way were Michigan, Ohio, Indiana, Texas, and Illinois, which combined added a quarter of a million of those jobs over the same period.

“You see manufacturers do more with less, as the unit labor cost goes down…[and] lean manufacturing has improved our overall competitiveness,” says Chad Moutray, chief economist for the National Association of Manufacturers.

About 40% of manufacturers are looking toward export trade as one of their primary growth vehicles today, the manufacturing association says.

At the same time, costs of labor, tariffs, and shipping overseas have risen. On average, it is still 20% more expensive to manufacture in the U.S. than it is with major trading partners overseas, excluding the cost of labor, according to the association.

The New York metropolitan area led the nation for exporting, shipping $105 billion of goods in 2011, according to the most recent numbers from the International Trade Administration, an increase of 25% from the prior year.

Alex Stadler is one of the entrepreneurs who has succumbed to the allure of New York’s manufacturing and exporting trade renaissance.

Stadler is the founder and sole proprietor of Stadler-Kahn, a textile manufacturer and retail store in Philadelphia. He manufactures hand-designed, high-end scarves in New York and exports them to Italy, in addition to selling in the U.S.

Because Stadler’s runs are so small, generally on the order of several hundred pieces at a time, he couldn’t work with the manufacturers he researched in China, he says. At the same time, Stoll, a German knitting machine company just establishing a foothold in Manhattan, jumped at the opportunity to help Stadler when he approached them.

And, in addition to Stoll, Stadler has found a whole cluster of businesses in New York City’s Garment District to work with him, including a manufacturer for his garment labels, and a distributor of the Merino wool he uses. These companies are all within walking distance of each other, Stadler says, so he can keep a close eye on things.

If Stoll ever has a question on his prototypes, Stadler says he can make it up to New York from Philadelphia in two hours.

Though Stadler admits that if he had the volume to engage a factory in China, he could make his product at a third his current cost, he says his customers feel good knowing they are paying for his American craftsmanship, not for middlemen, and extra shipping costs.

“People love to hear a product is made in the U.S., and those little letters `NYC’ hold a lot of glamour for customers,” Stadler says.

The decision to manufacture domestically depends primarily on your particular product, how easily and cheaply you can rent or buy space, and your ability to either hire or temporarily staff employees to do the work.  

One thing manufacturers like about assembling products overseas is the ease at which they can quickly ramp up or down without having to hire full-time employees. Some U.S. manufacturers like Brian Kline, chief executive of lighting company MSi SSL, have gotten around this hurdle by hiring temporary employees to do the work when they have it in the U.S.

MSi, based in Deerfield Beach, Florida, manufactures specialized LED bulbs for things like miners helmets, power lamps, and track lighting. While it uses a factory in China for 90% of its production, it also does 10% of its manufacturing in the U.S.

In situations when limited size orders have to be shipped to the customer on an extremely compressed time schedule that its Chinese factory can’t accommodate, it uses a team of temps to assemble the products in the small plant MSi has created above its office headquarters.

“Ramping up and ramping down is harder to manage here” with full-time workers, Kline says.

Similarly, there are a number of important things manufacturers need to keep in mind before they export. One of the first places you should probably turn to is the U.S. Commercial Service, a division of the U.S. Department of Commerce charged with helping U.S. entrepreneurs figure out the vicissitudes of exporting. (It recommends the federal site export.gov.) 

But the Commercial Service also has staff in 108 markets around the world that can help with things like identifying market opportunities and locating distribution partners. It offers free consultations and low rates for consulting work, which can includes finding suitable partners overseas. It also operates something called ExporTech, a pseudo university for entrepreneurs considering exporting, that helps develop international growth plans.

One of the most important things to consider about exporting, says Tom Moore, deputy assistant secretary for international operations at the Commercial Service, is making sure you have a robust market for your goods in another c
ountry
; that requires research and knowledge of competitors. It’s also critical to find an overseas partner you can depend on and trust. Working with someone you haven’t vetted properly can cost time and money.

Other best practices: research the rules and regulations of the market you’ll be selling into. That includes national product standards, certification requirements, electricity regulations, and packaging and recycling laws, as well as quality standards.

Knowledge of tariffs and other overseas taxes, as well as tariff codes is also essential, as entering the wrong tariff code can be a costly mistake, says Moore. For example, Moore says the Commercial Service worked with a globe manufacturer recently that had been entering a toy code instead of an educational code for its product. This cost the company an additional 20% in tariffs overseas.

“That can really impact your ability to sell into a [new] market,” Moore says.

SOURCE:  INC.com

Igloo Adds Workers, 130 Items, Brings Rotomolding In-house

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Rhoda Miel
October 2, 2012
KATY, TEXAS (Oct. 2, 11:55 a.m. ET) — Four years after a change in ownership, Igloo Products Corp. has boosted sales nearly 50 percent, revived its product line with 130 new items and is in the midst of a manufacturing investment that has improved productivity.

The company — best known for its line of coolers — is also adding rotational molding to its in-house capabilities this year with five new manufacturing lines and 20 more employees in Katy, where it is based. Igloo currently has 85 percent of its products made in the U.S.

“Obviously, made in America is the right vibe to connect with a lot of consumers right now, but what we’ve also been able to prove is that if you have an efficient manufacturing base, you can not only build in America, you can build a product at a lower cost,” said Gary Kiedaisch, CEO and chairman, in a Sept. 17 telephone interview.

Igloo was already a familiar consumer name when private equity group JH Whitney & Co. of New Canaan, Conn., bought the firm in 2008 from Westar Capital of Costa Mesa, Calif.

The company estimates that 90 percent of U.S. homes have some kind of a cooler, and Igloo products make up 75-80 percent of them.

However, prior to the buyout, the company’s sales were flat, according to Kiedaisch. The new owners set out to change that through an emphasis on new and improved products.

While the privately owned company does not release specific sales data, official said sales were up by nearly 50 percent at the start of 2012. In 2011, workers in Katy made 19 million hard-sided coolers alone.

As those new products caught on, Kiedaisch said, Igloo needed more — and more-efficient — capacity in-house.

Executive Vice President David Thornhill has helped lead the improvements at Katy, with more-efficient equipment, better production layouts and vertical manufacturing. The company estimates its efficiency has climbed by 30 percent since 2008.

Igloo already had its own injection molding, blow molding and foam molding operations. Even more processes could come on line with the right business case, Thornhill said.

Igloo also has non-plastics operations such as cut-and-sew for soft-sided coolers and additional outdoor recreation items including chairs and tents.

Those investments in products and manufacturing came at the same time that costs were increasing outside the United States, which helped highlight the benefits of vertical manufacturing in-house

“When you look at our manufacturing strategy, it’s to bring as many processes as possible inside,” Kiedaisch said. “For us, the picture has been that near-shoring is much more favorable than it was even 18 months ago.”

Thornhill and Kiedaisch look to one of Igloo’s new products as an example of how its business outlook has developed since 2008 and is continuing to impact the company’s strategy.

Igloo introduced the Yukon Cold Locker cooler at the start of 2012. The high-end cooler is marketed at sports enthusiasts and professionals who will spend days — if not weeks — out in the woods or on a fishing expedition.

“These are the guys who will spend thousands of dollars on a gun or a thousand dollars on a scope,” Thornhill said.

The Yukon was designed with extra insulation, capable of retaining ice for up to 14 days, compared to seven for a typical cooler. That is the kind of performance needed to keep swordfish or elk fresh during a long fishing or hunting trip.

The hard plastic outer shell and heavy-duty latches and handles also stand up to rough usage. Thornhill boasts that in tests, a bear spent an hour trying to break in before it gave up.

The Yukon also sells at a premium price, retailing at more than $300 for a 50-quart container and more than $700 for the 250-quart model. By comparison, Igloo’s 50-quart MaxCold hard-sided cooler lists for $65.99

Yukon coolers are rotational molded, so when orders for the Yukon took off and tripled the expected production capacity, Igloo knew it was time to bring rotational molding in-house. It currently contracts for rotomolding from outside suppliers that use a combination of domestic and international production.

Igloo has cleared 15,000 square feet of space in Katy for rotomolding and Thornhill is looking at additional production that could use the process. There is also space for future growth, while adding rotational molding is now allowing the company to list the Yukon as “Made in America.”

“We’re tooling up for this in a big way,” Thornhill said. “We’re looking forward to getting that group up and running.”

Follow Igloo products on social media:
Facebook: Igloo Coolers
Twitter: @IglooProducts

'Insourcing' Jobs To U.S. Can Be Driven By Tax Incentives, Production Quality

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Secretary of Labor Hilda L. Solis and VP David Cozzone talk to employee Gurcharan Kaur as she boxes up product at Princeton Tec, Bordentown, NJ, September 25, 2012. | Photo Credit: Beverly Schaefer/For The Times

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The rush to outsource manufacturing jobs overseas — particularly to China, where labor costs are significantly lower — has been well documented. Job losses in the United States have mounted at a staggering rate as a result.
The U.S. Secretary of Labor’s visit to a Burlington County flashlight manufacturing plant last week, however, shed light on a new phenomenon dubbed “insourcing.”

Princeton Tec, which has three factories in New Jersey, moved half of its manufacturing jobs to China five years ago to cut costs. While there were some savings, Princeton Tec executives grew uneasy with the lack of control regarding the production and delivery schedule. As a result, Princeton Tec started bring those jobs back to New Jersey, and now 90 percent of the 1 million flashlights and other portable light fixtures are once again made here.

“We need to bring back a renaissance in manufacturing — creating products that we can sell to compete with other countries and businesses abroad,” U.S. Secretary of Labor Hilda Solis said during a visit to Princeton Tec’s factory in Mansfield. “I just have to commend the owner of this plant for keeping the faith and making sure his product was made here.”

Federal officials recently announced an initiative dubbed “Make it in America” to provide tax incentives the help encourage more insourcing.

The return of jobs to the U.S. has led Princeton Tec to double its staff to 160 employees, and more hires are expected, company officials said.

“We’ve seen a small increase in profits since we got back. Nothing drastic,” Princeton Tec Vice President David Cozzone said. “I believe our quality got better, we could control output, and we kind of won people back. The ‘Made in USA’ thing is a big sell.”

As the U.S. continues to recharge its struggling economy, a resurgence of the “Made in the USA” commitment by consumers would help embolden companies like Princeton Tec to bring jobs back home. Federal and state tax incentives like those touted by Solis also provide a needed financial boost to companies that might otherwise opt to send jobs overseas.

Follow Princton Tec on Social Media: 
Facebook
Twitter
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SOURCE:  NJ.Com

Obama Administration Announces $40 million Initiative to Challenge Businesses to 'Make it in America'

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Contact Name: Jason Kuruvilla 
Phone Number: (202) 693-6587
Departments of Commerce and Labor partner to help companies create jobs, invest in America
WASHINGTON, D.C. — The Obama administration today announced a $40 million multi-agency competition, the Make it in AmericaChallenge, to accelerate the trend of insourcing, where companies are bringing jobs back and making additional investments here in America. The competition, which is being funded by the U.S. Department of Commerce’s Economic Development Administration and National Institute of Standards and Technology Manufacturing Extension Partnership and the U.S. Department of Labor’s Employment and Training Administration, will build upon the administration’s bottom-up approach to strengthening the economy and creating jobs by partnering with state, regional and local economies.

“More and more businesses are choosing to invest, create jobs and make things here in America, and this new initiative represents the latest effort by the Obama administration to build on that trend,” said acting Secretary of Commerce Rebecca Blank. “This administration’s top priority is creating American jobs, and through the Make it in AmericaChallenge, we will be supporting businesses’ efforts to expand here at home. By making competitive investments, the challenge will help communities across the U.S. accelerate economic growth, attract business investment and create jobs.”

“The modern global manufacturing landscape has changed the way companies do business, but it has also changed the way companies do training,” said Secretary of Labor Hilda L. Solis. “This initiative will provide comprehensive assistance to those companies and those communities committed to ‘make it in America’ through innovative training programs that lead to industry-recognized credentials and arm our workforce with the skills employers want to see from day one.”

Today’s announcement builds on the administration’s efforts to encourage companies — large and small, foreign and domestic, manufacturers and services firms — to increase investment in the United States. The president’s plan includes eliminating tax incentives for companies that ship jobs overseas and providing tax credits for companies that bring jobs back, investing in American workers to ensure they have the skills they need, modernizing our infrastructure and taking action to ensure that American businesses and workers are competing on a level playing field.

The national competition announced today will help provide the critical infrastructure, strategic planning, capacity building, technical assistance and workforce skills training necessary for American communities to be the desired home for more businesses.

The challenge is expected to give out approximately 15 awards, depending on the number of eligible applications.

To be eligible for an award, projects must encourage insourcing through onshoring of productive activity by U.S. firms, fostering increased foreign direct investment or incentivizing U.S. companies to keep their businesses and jobs here at home, as well as train local workers to meet the needs of those businesses.

A federal funding opportunity will be published by early 2013, which will provide detailed guidelines for submitting an application, including the deadline. 

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