Strong opinions on re-shoring, manufacturing policies

Many readers had very strong opinions on our recent Products Finishing Digital Dispatch issues that addressed items such as the current trend of re-shoring and also the lack of an effective manufacturing policy in the U.S.

On the re-shoring issue, several readers voiced their opinions on whether U.S. companies were actually saving money by sending products overseas to be made:

From Scott Campbell, Santa Rosa, CA: “Overseas production is not the great deal everyone has been led to believe. Sure, it has its advantages for short term production and labor intensive products. But the prices are only going up. Case in point - we had a CM in S Korea. Their labor was getting so expensive they moved their manufacturing to Thailand. That had a serious impact on everything - scheduling, quality, the works. When we phased out the product due to extremely low production yields and unacceptable field failures, we wound up phasing them out as well.”

From Rob Berger, Univertical: “As long as companies can see a perceived cost savings they will go to wherever the lowest manufacturing costs will be. The problem arose when US based companies only looked at what the unit cost was out of the US and neglected building cost, utility cost, shipping cost, delay to market cost, transportation of management cost, etc. It would be too easy to be sarcastic when describing these forgotten costs, but you get the general idea. Manufacturing in the US is becoming cheaper so companies will now start moving back or using the threat of moving back as an incentive to get their oversea personnel to ‘give back’ some of the benefits and progress those workers have made. Either option will lower the unit cost.”

From Gregg Taylor: “Even in my small customer base during the last five years our customers with volume have all gone overseas for much of their finishing. I compete job to job with finishers in China. In the last three months I have been seeing some of the customers come back. I have been assuming that this is because volumes are down to the point that the Chinese competition doesn’t offer the same discounts that they have been.”

From: Fred Koelling, Fremont, CA: “Re-shoring is not a trend. Although there has been some disappointment with Chinese quality most companies (ours included) are experiencing increased competency with Chinese manufacturers. We have done everything possible to source parts here in the US and pricing is not even close to the Chinese counterparts. In many cases we experience as much as a 10:1 difference. Since most major OEMS are producing their equipment in China, JIT means being in China and close to their points of manufacture. For many manufacturers (such as Nike) the greatest increase in revenue is coming from consumer purchasing in South East Asia. It troubles me to say that there remains very little incentive to manufacture in the US. Taxes are extremely high, regulations are tougher and more restrictive and overall manufacturing costs remain exorbitant by comparison to China and many other parts of the World. Re-shoring - I don't think so. American manufacturing is past tense with no near term revival in site. I wish I could believe differently."

As for the lack of a U.S. manufactuting policy, many felt that Congress was dragging its feet and neglecting the major backbone of the American economy: the thousands of manufacturing companies in this country that employ millions and pays billions in taxes:

From Tammy Britt, Gustafson Lighting: “The more Americans that are employed the more taxes that are collected through payroll, then the national dept can be reduced. People can support their families, buy needed items, etc. So when does it start? I have family that can no longer get the unemployment benefits and now worry they are next to loose their homes, cars and will have to move in with relatives or on the street. Maybe all in Washington need to truly live like true Americans. Then they might really work hard at fixing things."

From Rich Burton, Alliance, OH: “Have we lost our minds? The statistics as presented by our editor, Tom Pennington speak for themselves. Private sector businesses when left to the forces of the free market take care of themselves. The strong survive and the weak fail. Do we really want another government-run artificially propped-up subsidy program. Which of the government led subsidy programs have benefitted small businesses? Tom Pennington, our editor states, “But as Capital Hill twiddles its thumbs on helping small businesses and manufacturers, the numbers appear to be good for the sector, despite the lack of help from Congress.” So why try to fix something that isn’t broke. The market will adjust itself, IF left alone to do so. Haven’t we learned that yet? What’s it going to take? A complete take-over by government of all businesses - to realize that if left alone, businesses will function just fine. The best thing we could do is to have Congress to take a one-year fully paid vacation. Just imagine how much money our government could save! We do not need any more government assistance with all of its strings and preferential exemptions. Wake up America!

From Tom Linehan, Consultant: “Washington has over-reached to a nearly incomprehensible degree over the past 40 years. The Obama Administration's open, some would say flagrant, moves toward an avowed European model are merely changes in pace and ambition, not a new direction. What has all this centralization gotten us? Has public housing been a success? Has the War on Poverty with its trillions in "redistributed" wealth from the workers to the non-workers eliminated poverty? Has our public education system steadily improved and turned out a consistently informed and useful product? Have state-level economic development programs to ‘target’ certain industries been generally successful in creating self-sustaining engines of job growth?”

From Dana Schlumpberger, K&L Anodizing Corporation: “A manufacturing plan would be great but it’s not on (Congress’) agenda. Their agenda is to continue to move manufacturing out of the United States. Their propaganda paints the illusion of helping small business and manufacturing but their actions don’t back up their rhetoric. Please read the American Power Act (re-branded tap & trade) and think about its meaning while disregarding the rosy wording. Then find Glenn Beck’s show from May 12 on you tube and watch all the segments.”

From Milt Stevenson Jr., Anoplate Corporation: “Heaven forbid Congress and the President come up with a manufacturing policy for the US. It’s obvious that they don’t have the first clue about the subject! Without input from people actually connected to or having a solid background in manufacturing, any policy they can derive would be doomed. Needed—most definitely. Confident that Congress and the President can deliver—most definitely NOT!”