It was the first time in 22 years that a U.S. president has blocked such a foreign business deal.
Obama’s decision was likely to be another irritant in the increasingly tense economic relationship between the U.S. and China. It also comes against an election-year backdrop of intense criticism from Republican presidential challenger Mitt Romney, who accuses Obama of not being tough enough with China.
In his decision, Obama ordered Ralls Corp., a company owned by Chinese nationals, to divest its interest in the wind farms it purchased earlier this year near the Naval Weapons Systems Training Facility in Boardman, Ore.
The case reached the president’s desk after the Committee on Foreign Investments in the United States, known as CFIUS, determined there was no way to address the national security risks posed by the Chinese company’s purchases. Only the president has final authority to prohibit a transaction.
The administration would not say what risks the wind farm purchases presented. The Treasury Department said CFIUS made its recommendation to Obama after receiving an analysis of the potential threats from the Office of the Director of National Intelligence.
The military has acknowledged that it used the Oregon Naval facility to test unmanned drones and the EA-18G “Growler.” The electronic warfare aircraft accompanies U.S. fighter bombers on missions and protectively jams enemy radar, destroying them with missiles along the way.
At the Oregon site, the planes fly as low as 200 feet and nearly 300 miles per hour.
The last time a president used the law to block a transaction was 1990, when President George H.W. Bush voided the sale of Mamco Manufacturing to a Chinese agency.
In 2006, President George W. Bush approved a CFIUS case involving the merger of Alcatel and Lucent Technologies.
The Treasury Department said in a statement that Obama’s decision is specific to this transaction and does not set a precedent for other foreign direct investment in the U.S. by China or any other country.
China’s trade advantage over the U.S. has emerged as a key issue in the final weeks of the presidential campaign. Romney accuses Obama of failing to stand up to Beijing, while the president criticizes the GOP nominee for investing part of his personal fortune in China and outsourcing jobs there while he ran the private equity firm Bain Capital.
Both campaigns are running ads on China in battleground states, especially Ohio, where workers in the manufacturing industry have been hard-hit by outsourcing.
Obama, in an interview Wednesday with The Plain Dealer of Cleveland, said the U.S. must push hard against Beijing but “not go out of our way to embarrass” China.
“We’re not interested in triggering an all-out trade war that would damage both economies,” Obama said.
The president has the power to void foreign transactions under the Defense Production Act. It authorizes the president to suspend or prohibit certain acquisitions of U.S. businesses if there is credible evidence that the foreign purchaser might take action that threatens to impair national security.
CFIUS is chaired by the treasury secretary. The secretaries of state, defense, commerce, energy and homeland security are also on the committee. The director of national intelligence is a non-voting member.
Earlier this month, Ralls sued the national security panel, alleging CFIUS exceeded its authority when it ordered the company to cease operations and withdraw from the wind-farm developments it bought. Ralls asked for a restraining order and a preliminary injunction to allow construction at the wind farms to continue. The firm said it would lose the chance for a $25 million investment tax if the farms were not operable by Dec. 31.
But Ralls dropped the lawsuit this week after CFIUS allowed the firm to resume some pre-construction work.
Ralls’ legal team includes Paul Clement and Viet Dinh, two top law veterans of President George W. Bush’s administration. Both men were key players in Bush’s aggressive national security operation.
Clement, who was solicitor-general and argued administration positions before the Supreme Court, has since opposed the Obama administration’s health care plan and defended the Defense of Marriage Act before the top court.
Dinh, a former assistant attorney general who was the main architect of the Bush administration’s anti-terror USA Patriot Act, has lately served as a director and legal adviser to Rupert Murdoch’s News Corporation.
A second Chinese firm stymied by CFIUS urged U.S. authorizes this week to investigate their firm to quell fears of ties to China’s military. Huawei Technologies Ltd. announced in early September that it would unwind its purchase of U.S.-based computer firm 3Leaf Systems after the deal was rejected by CFIUS.
Huawei, one of the world’s largest producers of computer network switching gear, has repeatedly struggled to convince U.S. authorities that they can be trusted to oversee sensitive technology sometimes used in national security work.
'Insourcing' Jobs To U.S. Can Be Driven By Tax Incentives, Production Quality
UncategorizedOctober 1, 2012
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.
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Obama Administration Announces $40 million Initiative to Challenge Businesses to 'Make it in America'
UncategorizedPhone Number: (202) 693-6587
“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.
Obama Blocks Chinese Wind Farms Purchase Near Navy Base
Uncategorized9/28/2012
Obama’s decision was likely to be another irritant in the increasingly tense economic relationship between the U.S. and China. It also comes against an election-year backdrop of intense criticism from Republican presidential challenger Mitt Romney, who accuses Obama of not being tough enough with China.
In his decision, Obama ordered Ralls Corp., a company owned by Chinese nationals, to divest its interest in the wind farms it purchased earlier this year near the Naval Weapons Systems Training Facility in Boardman, Ore.
The case reached the president’s desk after the Committee on Foreign Investments in the United States, known as CFIUS, determined there was no way to address the national security risks posed by the Chinese company’s purchases. Only the president has final authority to prohibit a transaction.
The administration would not say what risks the wind farm purchases presented. The Treasury Department said CFIUS made its recommendation to Obama after receiving an analysis of the potential threats from the Office of the Director of National Intelligence.
The military has acknowledged that it used the Oregon Naval facility to test unmanned drones and the EA-18G “Growler.” The electronic warfare aircraft accompanies U.S. fighter bombers on missions and protectively jams enemy radar, destroying them with missiles along the way.
At the Oregon site, the planes fly as low as 200 feet and nearly 300 miles per hour.
The last time a president used the law to block a transaction was 1990, when President George H.W. Bush voided the sale of Mamco Manufacturing to a Chinese agency.
In 2006, President George W. Bush approved a CFIUS case involving the merger of Alcatel and Lucent Technologies.
The Treasury Department said in a statement that Obama’s decision is specific to this transaction and does not set a precedent for other foreign direct investment in the U.S. by China or any other country.
China’s trade advantage over the U.S. has emerged as a key issue in the final weeks of the presidential campaign. Romney accuses Obama of failing to stand up to Beijing, while the president criticizes the GOP nominee for investing part of his personal fortune in China and outsourcing jobs there while he ran the private equity firm Bain Capital.
Both campaigns are running ads on China in battleground states, especially Ohio, where workers in the manufacturing industry have been hard-hit by outsourcing.
Obama, in an interview Wednesday with The Plain Dealer of Cleveland, said the U.S. must push hard against Beijing but “not go out of our way to embarrass” China.
“We’re not interested in triggering an all-out trade war that would damage both economies,” Obama said.
The president has the power to void foreign transactions under the Defense Production Act. It authorizes the president to suspend or prohibit certain acquisitions of U.S. businesses if there is credible evidence that the foreign purchaser might take action that threatens to impair national security.
CFIUS is chaired by the treasury secretary. The secretaries of state, defense, commerce, energy and homeland security are also on the committee. The director of national intelligence is a non-voting member.
Earlier this month, Ralls sued the national security panel, alleging CFIUS exceeded its authority when it ordered the company to cease operations and withdraw from the wind-farm developments it bought. Ralls asked for a restraining order and a preliminary injunction to allow construction at the wind farms to continue. The firm said it would lose the chance for a $25 million investment tax if the farms were not operable by Dec. 31.
But Ralls dropped the lawsuit this week after CFIUS allowed the firm to resume some pre-construction work.
Ralls’ legal team includes Paul Clement and Viet Dinh, two top law veterans of President George W. Bush’s administration. Both men were key players in Bush’s aggressive national security operation.
Clement, who was solicitor-general and argued administration positions before the Supreme Court, has since opposed the Obama administration’s health care plan and defended the Defense of Marriage Act before the top court.
Dinh, a former assistant attorney general who was the main architect of the Bush administration’s anti-terror USA Patriot Act, has lately served as a director and legal adviser to Rupert Murdoch’s News Corporation.
A second Chinese firm stymied by CFIUS urged U.S. authorizes this week to investigate their firm to quell fears of ties to China’s military. Huawei Technologies Ltd. announced in early September that it would unwind its purchase of U.S.-based computer firm 3Leaf Systems after the deal was rejected by CFIUS.
Huawei, one of the world’s largest producers of computer network switching gear, has repeatedly struggled to convince U.S. authorities that they can be trusted to oversee sensitive technology sometimes used in national security work.
Not Without My American Car
UncategorizedHearing all of this was a buzz kill for me, because while the car size and color were important to my wife, having an American-made car was important to me. This is primarily due to three main factors.
First, American cars were quite popular while I was growing up in Dubai in the late ’80s. They were everywhere and almost everyone was talking about the ‘muscle’ cars that were coming in from America. (Ok, they love their Benz too.) So I grew up coveting American-made cars and goods.
Second, I have made frequent trips to Michigan, to the city of Dearborn particularly, and I know how prideful Arab-Americans are about their American made cars. Everyone in that town loves to talk about Ford and how it was the reason many immigrants ended up there working in the car industry and building American engines. Many Lebanese flocked to the area in the early 1900’s seeking jobs at Henry Ford’s Model T plant, as the pioneering automobile entrepreneur was offering a whopping $5 a day. That kind of pride left an imprint on me. I have had dinner at the home of an engineer who works for Ford and was part of the team that worked on the Sync technology. You cannot match this kind of pride, not even in Japan. Notable Arab Americans have played significant roles in the car industry, like Jacques Nasser, who was formerly the president and CEO of Ford Motor Company. Another Arab American is credited with creating “the ‘revolutionary’ 1949 Ford car design, a design that some credit with saving the company.” You have Richard Caleal to thank for that.
Third, I live in the States, a place that has given me a refuge — a home away from home. I went to school here and work here. I live here and I know that in these tough economic times, people need to stick together. We cannot always look for what’s best for ourselves, like better car mileage, and ignore the ghost towns around the county. This was the same mentality of an Arab American physician that limited himself to buying only American cars. The same sentiments were echoed by my good friend Sarah — a native of Michigan who got on my case until I finally bought our car. It might be loyalty, or some might call it patriotism, but either way it’s a choice people here are free to make.
My wife and I settled for a Chevy Aveo LS — a nice compact car that meets our needs. My wife Roa has even given it a name after her own mother. She loves the little car. We have learned that American-made cars tend to have cheaper parts and there is no shortage of mechanics who are well-versed in American cars. One doesn’t need to hop in a time machine to find good American-made cars.
I once worked for a former member of Congress, a native of Cleveland, and she told me that she will only drive American cars to show support to the hard working men and women working in local car plants.
But the cynics and skeptics are not all bad. In fact I think those who criticize the American car industry do it a huge a favor; they pressure automakers to innovate and make better cars. We cannot all take whatever the car industry makes — they have to be responsive to their customer base. This is what makes a free market and this certainly makes better cars. If all customers were content with mediocre cars, then no one wins.
The Return of 'Made in USA'
UncategorizedSeptember 25, 2012
Dave Schiff, chief creative officer at Made Movement, a website that markets and sells only American-made products, said the trend is beginning to spread, and that it could be a major influence on the success of American manufacturing companies.
Earning that iconic tag, however, is no easy feat. The Federal Trade Commission has drafted a 44-page book that discusses exactly what it takes to gain “Made in USA” status.
The timing may be just right for us manufacturers to boast their American factories, considering Robert McCutcheon, the U.S. industrial products leader of PwC, recently wrote in Forbes that there are a number of signs that domestic manufacturing could soon surge again.
'Made in The USA' Can Save Manufacturing Costs
UncategorizedSeptember 28, 2012
With clients shopping online and in stores, it’s important to manage inventory wisely and be able to quickly increase or pull the plug on certain products. When a product isn’t selling well, a management team doesn’t want to be stuck with a massive amount of inventory that has yet to be shipped from across the globe. When production facilities are located in the U.S., it’s easier for businesses to move through the product quickly and make room for goods that will sell well.
While a product can arrive in days, or even hours, from across the country, it can take weeks for products to be shipped from overseas. Asking clients to wait a day before receiving their item is easier than asking them to wait three weeks while it is shipped from Asia. Managing inventory and stock is much easier when a company doesn’t have to worry about shipping time, complicated logistics and miscommunications that can lead to serious delays.
Trend forecasting
When your products are made at home, it’s easy to take advantage of local trends. When certain goods become more popular, it’s easy to have them made quickly and ready to sell in no time. Consumer demand may rise sharply if a product becomes particularly popular, and it’s much easier to manage production levels when a company’s manufacturing is close by. It’s easy to predict a trend when a business owner is local, and an L.A. company may be able to determine what they need before their supplier in China does.
Cutting costs
Moving production back to the U.S. doesn’t just help with inventory management and make it easier to change orders quickly. It’s also saving companies money on their production.
Many countries in Asia used to be known for their cheap labor and inexpensive supplies, which made it common for business to move their manufacturing facilities there. In the past few years, the cost of doing business in these traditionally inexpensive countries has been rising. This has made the U.S. a more attractive place to do business, and companies are noting the decreased costs and slowly moving their production back to the U.S.
Cities Leading An American Manufacturing Revival
Uncategorized5/24/2012
Certainly how long this expansion can last is an open question, particularly given weakness in Europe and the slowdown in formerly fast-growing developing countries. But one thing is clear: the industrial resurgence is reshaping the economic and employment map in often unexpected ways.
Now rather than being pulled down by manufacturing, our Best Cities For Jobs survey, conducted by Pepperdine University’s Michael Shires, found that many industrial regions are benefiting from their prowess.
From 2010 through March, manufacturers added 470,000 jobs and enjoyed a rate of job growth 10% faster than the rest of the private economy. In the past many areas suffered from having too many industrial workers. Now it looks like we will have too few skilled ones, even in hard-hit sectors like the auto industry. In 2011 there were 50,000 unfilled U.S. job openings in industrial engineering, welding, and computer-controlled machine tool operating, according to the forecasting firm EMSI. If the revival continues, this shortage could worsen.
To determine the cities that are leading the manufacturing revival, we assessed manufacturing employment growth in the 65 largest metropolitan statistical areas. Rankings are based on recent growth trends, as well as job growth over the past five and 10 years, and the MSAs’ momentum.
Where Technology Meets Manufacturing
In an era of excitement over the Internet, it is often forgotten that a majority of the country’s scientists and engineers work for manufacturers, and that industrial companies account for 68% of business R&D spending, which in turn accounts for about 70% of total R&D spending.
Nowhere is this linkage between technology and industry more evident than in the Seattle-Bellevue-Everett area, which ranks first on our list of the metropolitan areas leading the manufacturing revival. Over the past year the region was No. 2 in the nation in manufacturing growth, with employment expanding 7.9%. The aerospace sector, led by Boeing, accounted for roughly half this expansion.
The growth in aerospace and high-tech employment creates precisely the kinds of high-wage jobs, including for blue-collar workers, that are lacking in many parts of the country. In 2010 the average factory wage in the area was $64,925, up 9% from 2007. Most critically, manufacturing activity drives growth in other sectors of the economy. About one in six of all private-sector jobs depend on the manufacturing sector, and every dollar of sales of manufactured products generates $1.40 in output from other sectors, the highest of any industry.
As manufacturing employment overall has dropped, the percentage of higher-wage, skilled industrial jobs has been climbing over the last decades, particularly in high-technology related fields Overall, according to EMSI data, the average American factory worker earned $73,000 in 2011, $20,000 more than the average job.
Seattle is not alone in creating high-tech-oriented industrial jobs. Over the past two years Salt Lake City, Utah, which ranks third on our list, has seen significant growth in both electronics and aerospace employment, including a new Northrop Grumman facility. Firms connected to the medical device industry such as Biomerics are also expanding in the area.
Manufacturing is also rebounding in Austin-Round Rock-San Marcos, Texas, which ranks eighth on our list and No. 1 on our overall list of Best Big Cities For Jobs. Last year industrial employment in the Texas state capital area jumped 5%. Semiconductor firms are a big force, employing over 10,000 workers. Although more known for its high-tech electronics, Austin has also enjoyed an expansion in automobile-related employment as well as medical devices.
Energy Capitals
The largest grouping of manufacturing stars have emerged from the Texas-Oklahoma energy belt. With the shale drilling boom unlocking ample supplies of natural gas and lowering prices, petrochemical companies have undertaken major expansions. The rise in drilling and exploration has also sparked greater demand for industrial products such as pipes, drill rigs and other machinery. No surprise that the biggest backers of shale gas exploration are prominent CEOs of industrial firms. A recent study by PwC suggests that shale gas could lead to the development of 1 million industrial jobs.
The shale drilling revolution is making an impact across the country, in places like North Dakota and Youngstown, Ohio, but the epicenter of this boom remains firmly in the oil patch. The Thunder you hear in Oklahoma City is not just on the basketball court — energy growth has propelled a 1,500 person jump in manufacturing employment, a 6.1% increase, with another 1,000 new jobs expected this year. Oklahoma City ranks second on our list.
Other energy capitals are also thriving on the industrial front, including Houston (fourth place), San Antonio (seventh) and Ft. Worth-Arlington (ninth). Although energy is the main driver, manufacturing has been on the rise in a broad array of areas, including aerospace, biomedical and food processing. The surging export economy — Texas is easily the nation’s number one export
er —
has further bolstered this growth.
Rustbelt Rebounders
The high-tech and energy economies may be fast-breaking in terms of industrial growth, but manufacturing’s comeback has put some new bounce in the step of many long forlorn parts of the nation’s “rustbelt.” Warren-Troy-Farmington Hills, Mich., epitomizes this trend. Unlike Detroit, which has suffered mass disinvestment, this more suburban area a half hour drive away has become the epicenter of a new, more tech-oriented auto industry.
The Warren-Troy area’s rich concentration of skilled tradespeople and industrial engineers has been described as America’s “automation alley.” It continues to attract high-industrial firms from abroad such as Brose, a German car parts manufacturer, which has recently announced a $60 million investment in the area. Even housing is on the rebound, with rents rising at the fourth highest clip in the country, just behind such standouts as San Francisco and Miami.
Nor is the Midwest manufacturing rebound limited to Michigan. Over the past year sixth-ranked Cincinnati enjoyed 5.4% growth in industrial employment. Manufacturing growth was also strong in Milwaukee-Waukesha-West Allis, Wisc., a center for the production of machine tools and other precision equipment that ranks 10th on our list.
Who’s Falling Behind
Of course not all regions have benefited from the industrial resurgence. For example, the nation’s largest industrial area, Los Angeles, ranks a miserable 49th. The area lost some 20% of its industrial jobs since 2006, and the losses continued over the past year. This goes a long way to explain the area’s continued underperformance before, during and, now, in the early days of recovery from the financial crisis.
Some other large regions did even worse, including such one-time industrial powerhouses as Philadelphia (55th) and New York (59th). Some may argue that these, and other areas, which have been losing manufacturing jobs for decades, no longer need to engage in the messy business of making stuff. But that long fashionable way thinking may be outdated itself, as seen by the improving fortunes of our industrial top 10.
Full List: The 10 Cities Leading The U.S. Manufacturing Revival
Hershey Invests $300 Million In Future Of American Manufacturing… And Consumption
Uncategorized9/25/2012
I talked with JP Bilbrey, President and CEO and Terry O’Day, SVP of Global Operations about the investment. Both say that the plant is an homage the company’s roots and founder, which is a warm, nice thought. More tangibly, what it does is reaffirm Pennsylvania’s role in the company’s chocolate manufacturing for North America. The plant employs technology never before seen in candy manufacturing, O’Day says, including highly automated IT systems designed to keep Hershey’s Kisses rolling off the lines 24 hours a day.
And while automation means fewer workers in the plant,(Hershey is training 700 of its 4,800 Pennsylvanian employees to run it) the company estimates that it will still produce $1 billion in economic gains for Pennsylvania over the course of five years — coming in the form of supplier contracts, payroll and related spending.
It may be cheaper to manufacture in other countries — and Hershey does, its playing a big game in emerging markets like India, China and Brazil — but when it comes to making chocolate there are other things to consider. For Hershey, that means access to fresh milk. Their West Hershey plant consumes between 300,000 and 350,000 gallons of milk a day — mostly from a 90-mile radius surrounding the plants. And they want short commutes for products to retailers.
The new plant isn’t the only way Hershey is employing technology. Come candy seasons (Valentine’s Day, Halloween, Christmas) they now use a proprietary system to place orders for retailers — so they know how much of each Hershey’s product they should purchase. This alone would be unremarkable, but retailers have come to trust the system so thoroughly that Hershey now uses the system to order competitors’ products for retailers too. The combination of trust and efficiency has reaped the company serious rewards — their market cap that has doubled in the past five years, growing 20% in the past 12 months.
Bilbrey affirms that 80-90% of Hershey products consumed in the US are made in the US, and the company boasts more than a 40% share of the American chocolate market. In that sense, the new plant is part of Hershey’s broader strategy — to maintain, if not grow, share in the US, where it already has a prominent presence, while more or less ignoring another behemoth established market — Western Europe, where they see low growth, established competitors, loyal customers and high price of entry.
“We have outperformed our peer group in North America,” Bilbrey says. “And we see North America as a growth story. We worry about a lot of things, but we are optimistic about what is possible.”
That includes upping advertising, Bilbrey says that Hershey spends as much on advertising now as their entire category did in 2008 — Hershey now reinvests about 7% of net sales into advertising. More proof, he says, that the company believes that brighter days lie ahead for America and that Americans will be spending more of their disposable income on candy.
Manufacturing Renaissance? Exports, Reshoring Could Bring 5M Jobs to U.S.
UncategorizedSeptember 21, 2012
The uptick is production combined with the jobs needed for reshoring could add up to 2.5 million to 5 million jobs by the end of the decade as manufacturers shift production back to the U.S., according to the study.
That’s up from BCG’s forecast last year, when it predicted the U.S. would add just 2 to 3 million jobs, as major companies have started revealing intentions to shift some jobs to the U.S. over the next few quarters.
“Over the coming years, as European and Japanese companies decide where to locate new capacity, we can expect many more announcements like these,” said Michael Zinser, coauthor of the BCG report who leads the firm’s manufacturing work in the Americas.
While the return of jobs to U.S. shores, also referred to as insourcing and onshoring, is still a relatively new phenomenon, several large manufacturers have recently announced plans to expand or move production to the country.
Toyota, for example, announced that it will export Camry sedans made in Kentucky and Sienna minivans made in Indiana to South Korea, while its Japanese auto rivals Honda and Nissan plan to increase production in the U.S. While U.S. automakers continue to expand to the high-growth markets in Asia, General Motors has vowed to invest $2 billion in U.S. factories by 2014.
Siemens is building gas turbines in North Carolina to ship to Saudi Arabia for construction of a 4-gigawatt power plant, while Rolls-Royce recently opened a new aircraft engine parts manufacturing facility in Virginia, citing among other things lower labor costs.
The reshoring moves come as average manufacturing costs continue to fall in the U.S. BCG estimates that they will be 8% lower than in the U.K. in 2015, 15% lower than in both Germany and France, 21% lower than in Japan and 22% lower than in Italy.
China will still be about 7% cheaper than the U.S. but that doesn’t include the high cost to ship bulk items around the world.
A decline in labor costs are expected to help give the U.S. a competitive advantage in manufacturing compared with some of its developed peers, where they will be paying workers anywhere from 20% to 45% more, BCG estimates.
Lower energy and gas costs, led by the recovery of deposits in the oil-rich Bakken and Marcellus Shales, are also expected to help.
“The signs pointing to continued export growth offer further evidence that the U.S. is poised for a manufacturing renaissance between 2015 and 2020,” said Harold Sirkin, a senior partner at BCG who coauthored the research.
In Manufacturing Shift, Made in U.S. but Sold in China
UncategorizedSeptember 20, 2012
Yes, he did say China.
Mr. Abel’s company, Watermark Designs in Brooklyn, is standing history on its head: it is making plumbing parts and shipping them to China.
After generations of manufacturers in New York and across the United States folded because they were unable to compete with imports, Watermark, with its only factory in the East New York section of Brooklyn, has managed to crack the code. Instead of trying to make Watermark’s products cheaper, Mr. Abel has prospered by first making them more expensive — offering custom-made fixtures unique to each building — and then figuring out how to do that at lower cost. The company has supplied thousands of fixtures to six new luxury hotels and condominiums being built in Shanghai, Macau and Hong Kong.
“The days of mass producing in New York City are gone,” Mr. Abel said. “If you were producing nuts and bolts by the tens of thousands 50 years ago, you’re not going to do it today. But creativity, or uniqueness or design is definitely something that can flourish in New York.”
Just as they have in many parts of the country, exports have taken up the slack for the business that Watermark lost during the economic downturn that began in 2008. The New York metropolitan area led the nation last year in exports, rising to $105 billion, its highest ever, from $85 billion in 2010, according to a report released last week by the International Trade Administration, a branch of the United States Department of Commerce that supports companies doing business overseas.
Fencing and flooring for dance clubs, stadiums, and big tents are being made in the Bronx by Signature Fencing and Flooring and shipped to South Africa, Japan, Britain and India. From Medford, on Long Island, Enecon, which makes corrosion-resistant coatings for industrial equipment, ships to 65 countries.
Manufacturing jobs in New York have declined by about 80 percent from a high of 1.1 million jobs in 1947, all but shutting down what had been a heavily trod avenue into the middle class for immigrants and people without advanced educations.
Mr. Abel, who was born in Israel, grew up in the Bronx and studied engineering at the City College of New York and Columbia University, started his business in 1976 in a small metal plating company that his father ran from a 2,000-square-foot storefront in Sunset Park, Brooklyn. For a number of years, it did well and grew by refinishing inexpensive parts and selling them through neighborhood bath stores and the early home improvement centers. Mr. Abel moved into supplying high-end fixtures just as the city was entering a period of luxury construction.
It was a strong strategy, made possible, Mr. Abel said, by his son Avi, who joined the business after graduating from the State University of New York at Binghamton (now Binghamton University) and among other things, overhauled its design capabilities. Around 2006, Watermark bought a three-dimensional printer for $60,000. It works like an ink jet printer, except that it squirts molten plastic to build a form, instead of ink onto paper.
Robert Brenner, 26, a design engineer for the company, showed a plastic prototype of a handle made to an architect’s specifications. “This took three to four hours,” he said.
After the prototype is approved, Watermark tunes its lathes and milling machines to make the actual parts. In such a world, cheap labor is a dwindling advantage. “I can get the best equipment,” Mr. Abel said. “I can’t get someone to operate it — machinists, machine programmers, people with knowledge how to operate sophisticated equipment, they’re not there.”
Nearly 40 years after starting in the storefront, the company employs 45 people in 55,000 square feet. Most of the workers have been with the company for 10 years or more. Besides high-tech equipment, the company now has something else that wasn’t available years ago — Brooklyn chic.
“My son says we should stand on a box and shout it loud: ‘This is made not only in the U.S.A., but in Brooklyn,’ ” Mr. Abel said, “It’s what Paris had been. We have become a design mecca.”
Contact JIM DWYER
E-mail: dwyer@nytimes.com
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