Onshoring Update From Manufacturer's Alliance

Mfg.com (AJ) - In this video, Cliff Waldman, and economist with the Manufacturer’s Alliance, is interviewed about why companies like Caterpillar and GE are reassessing their original offshoring decisions based on total landed costs – extended supply chain, logistics, intellectual property protection, training and other unexpected costs. More and more companies are finding that onshoring or backshoring production and rethinking the US as a production platform actually save money. Watch the video here.

Even though labor and land costs are often lower in other countries, stability and quality are becoming more important – especially now that Lean is gaining favor with all manner of US manufacturers.

Onshoring Manuacturing
Manufacturing Automation (Chiappinelli) - In a Wall Street Journal article, Caterpillar spokesman Jim Dugan said the onshoring announcement was part and parcel of “a long-term look at where we think this market and this product is going globally and how can we best get ourselves positioned.”
If Caterpillar follows through on the plan to build out U.S. production, the WSJ states, it could take advantage of a depressed dollar, job incentives coming out of Washington, and shortened supply and distribution chains for its products. The company expects U.S. demand for its construction machinery to pick up after a period of relative drought, and I suspect that many of its fellow manufacturers might see similar demand patterns emerge in the next couple of years. That is, manufacturers that in recent years plied emerging markets to help keep sales respectable might now see a resurgent customer here in America.

If that dynamic plays out, the total landed cost for many goods producers will change yet again. Throw in reduced spending power overseas, the persuasive power of job tax credits at home, and an eager U.S. labor force willing to work for less, and supply chains may get much homier in the near term.