Companies were encouraged to reshore by bringing their manufacturing back into the United States for the various benefits it offers Friday at One Norwegian Plaza.


“What we’re trying to do is educate manufacturers … There’s a lot of things happening offshore, especially in China. Wages are going up, the costs are expensive, so we’re encouraging them to look at the total cost. Many manufacturers are doing that and realizing that producing or making in the United States is just as competitive offshore,” Maureen Mulcahy, project coordinator of the Make It In America initiative, said Friday.


Occasionally referred to as insourcing by President Barack Obama, reshoring is returning production sourcing from offshore to where it was originally produced, Mulcahy said.


Mulcahy focused her presentation to 11 people in 250 One Norwegian Plaza about the total cost of ownership, which is “a calculator where they can compare the cost of sourcing or producing offshore versus sourcing or producing in Pennsylvania,” she said.


“That’s a key point. The other key point is we’re helping manufacturers that want to reshore a part or an item, we’re helping them by providing supplier scouting within the state of Pennsylvania,” she continued.


Offshoring, or taking manufacturing out of the country, “impacts a country’s industrial commons,” Mulcahy said.


“In the 1960s, we offshored the semiconductor industry and from the industry came the flat panel display industry and from that industry came the LED lighting industry. So all the innovation, who would have thought by offshoring semiconductors you would have LED lighting market production mostly in Asia … That’s how offshoring can really affect the country,” she said.


Mulcahy said there have been reshores all over the United States — including Apple with computer parts — but she highlighted some Pennsylvania reshores, such as Independence LED lighting, the semiconductor industry that flourished into an LED company.


“They brought back to this area mostly because this is where their market was — Washington, D.C., and New York City, there were a lot of lighting needs in those areas. It made more sense to them to produce where it was being consumed,” Mulcahy said.


She also shared an “interesting story” about the reshoring of Reading Truck Parts.


“They would get containers of parts and they would have no idea what was in those containers until they opened them up, so you can imagine trying to complete a truck for a customer, assuming that the part is going to be in and this next shipment comes in and it’s not there,” Mulcahy said.


Reading Truck Parts found that they could make parts in the United States for about the same costs as in China without the difficulties.


The top three reshored industries are electrical equipment, transportation and apparel and textiles, Mulcahy said.


One of the most commonly cited reasons for reshoring is to reduce the total cost of ownership.


“Companies are starting to pay attention to total cost of ownership. They want to reduce that lead time to the market. They want to be more responsive to their customers,” Mulcahy said.


Another is the skilled work force available in the U.S.


“We are very lucky, very blessed that we have a skilled workforce and they want to come over and they want to have access to that,” Mulcahy said.


Reducing inventory is important to manufacturers in saving money.


“Reduce that inventory because they’re paying for inventory. That’s a cost that they paid for that they haven’t yet had a turn on,” Mulcahy said.


Reducing intellectual property that can be stolen is also commonly cited for companies to reshore.


“If you’re working on technology … and you are offshoring, there’s a huge risk that your intellectual property will be taken,” Mulcahy said.


Reshoring began more than 50 years ago in the United States.


“Since about the 1960s, we started to offshore our production, but then in 2001, when China joined the World Trade Organization, we offshored in a 10-year period about 2.7 million jobs … A lot of people just kind of followed the bigger guys over. What they realized was that it was a herd mentality but it was also they didn’t realize the total costs,” Mulcahy said.


The most reshoring is currently occurring in China.


“About 3.5 million people are aging out of the Chinese work force every year. China’s had that one child policy for so long that they really don’t have that population to replace those workers, so what they’re doing is they’re trying to entice workers to come in and work in the factories and to do that, China, the government, has put in mandatory wage increases of 13 percent through 2013,” Mulcahy said.


The 10 most commonly cited reasons for reshoring


 


• Reduce the total cost of ownership


• Reduce lead time to market


• Improve product quality


• Access to skilled workforce


• Wage inflation and currency change of host country


• Reduce freight costs


• Reduce inventory


• Improve brand image with “Made in USA”


• Reduce intellectual property and supply chain interruption risks


• Enhance innovation by clustering manufacturing near R&D facilities