Rebuilding and Reshoring: Four Actions Communities and States Can Take
Category: Supply Chain • Feb 12, 2021
By Harry Moser, Founder/President, Reshoring Initiative®
The U.S. has no control over the behavior of foreign consumers and governments. Changes in currency and tariffs can be subject to WTO approval. However, we have unlimited control over our domestic internal competitiveness initiatives, such as skilled workforce development and taxes. The state and community levers can be implemented more quickly than the federal. The following are four ways to collaborate locally to support American competitiveness and rebuild a U.S. manufacturing powerhouse.
1. Encourage Workforce Development
- The federal government controls most of the large reshoring tools, such as taxes, currency, innovation funding, duties and tariffs, and trade agreements. Communities’ and states’ biggest lever is the quality and quantity of a skilled workforce to make local industry competitive enough to reshore and provide needed capacity to handle the resulting reshored work. (Look for my upcoming article on Rebuilding & Reshoring with a skilled workforce.)
- Promote More Post-Secondary School Options. I would like to see a shift in educational focus to include advanced manufacturing skills training. For example, a partnership between Haas Automation, Inc. and the state of Louisiana will enable the automated production of parts with advanced Haas 5-axis machining centers installed at every community and technical college in the state. “Keeping Louisiana’s community and technical colleges equipped with the latest technology allows us to train individuals for advanced manufacturing jobs,” said Executive Director Paul Helton, LED FastStart® program.
- Provide data that illustrates and compares the income by university fields of study with the incomes of apprenticeship graduates. Twenty-five years ago, I showed that an apprentice graduate could expect to have a $1 million higher net worth at age 49 than a graduate with a bachelor’s degree in English. I suspect the same holds true today, since we have a continued shortage of skilled workers and an excess of liberal arts graduates (typically 30+% are in jobs not requiring a university degree.) We should dispel the widely quoted but misleading statistic about $1 million more lifetime income for a university degree vs. a high school degree; furthermore, this statistic is not accurate versus apprentice graduates and holders of in-demand certificates.
2. Improve Site Selection Rankings
- The number one criterion for a company’s site selection is a skilled manufacturing workforce. Achieve, document, and promote that your region is at the top of the list in awarding NIMS, MSSC, and AWS credentials; similarly for engineering degrees at community colleges and universities.
- Give companies what they say they seek when reshoring, including a skilled workforce. This table ranks the positive factors companies sought and found when they did reshoring and FDI. Factors where state and community can make the most difference are in red.
- Create a strong “industrial commons,” as studied by Harvard Business School professors Gary Pisano and Willy C. Shih. Develop OEMs, supply chain, and skilled workforce to be competitive at specific manufacturing industries. Respond to the potential loss of jobs to imports and companies considering offshoring manufacturing.
- Stanley Black & Decker recently announced it would use DeepHow’s artificial intelligence (AI) knowledge transfer system for the skilled trades to train and up-skill workers. While skilled workers perform their individual processes, DeepHow captures their workflow, and through AI technologies, turns the complex processes into step-by-step how-to videos.
- Keep taxes and debt under control. Keep state and local taxes and other costs low enough in your region so that companies come to you instead of elsewhere. No company wants to build a factory and be saddled with the results of fiscal irresponsibility.
3. Help Companies Reevaluate Sourcing Decisions
- Use the Reshoring Initiative’s resources to help companies consider reshoring:
- Help companies use the free online TCO Estimator for siting, buying and selling smarter. They will find that 20 to 30% of what they import would be more profitably sourced or produced locally.
- Promote reshoring by local OEMs. The Siting and Buying Smarter (SBS) program can help.
- Help local suppliers sell against imports nationally. The Import Substitution Program (ISP) was created to help suppliers convince importing companies nationwide to source from the suppliers instead of importing.
- Attract domestic or foreign companies to fill supply chain gaps. The Supply Chain Gaps Program (SCG) is a targeted list of supply chain gaps and product categories that have a large volume of imports and no or minimal domestic production. I can provide any state with a list of supply chain gaps customized to the state’s priorities and industries. I also have a list of each product category’s current largest foreign suppliers to pursue for FDI.
4. Collaborate Locally to Fuel Growth
- Ask local companies to report all their reshoring cases. Recognize top cases through media coverage and The National Metalworking Reshoring Award. Collect and share data and cases of local entrepreneurial success in manufacturing for non-degree holders. Get the media to announce the cases to strengthen the image of skilled manufacturing careers.
- Encourage your mayor, governor, and state legislators to appeal to local companies to reevaluate offshoring and determine what work can be more profitable when reshored.
- Buy American. Some governments ask companies to be loyal to the community and then offshore products or services. California sourced much of the fabrication work for the San Francisco-Oakland Bay Bridge from China. Initially they saved money but in the final analysis, they sacrificed U.S. jobs and tax revenue and have had quality problems ever since.
- Partner with NIST’s Manufacturing Extension Partnerships (MEPs) and manufacturing associations to educate and enable companies to reshore. MEPs in Illinois, New York, Ohio, and Rhode Island are already offering some of the programs listed above.
- Communities and states do not have as much impact as the federal government but manufacturers have more influence locally than nationally. I encourage you to send this article to your local and state governments, EDOs (Economic Development Organizations), MEPs and education/training officials. We are happy to help them help you.
Click here to read more of Harry Moser’s Rebuilding & Reshoring series.