The bottom line for both manufacturers/OEMs and their suppliers and small- and medium-sized manufacturers is this:
Not all work belongs within any shore or market. Total cost of ownership should determine geographic production to maximize value to all parties. Hidden costs can inhibit profits, innovation, quality, intellectual property protection, customer responsiveness, inventory costs, and cause a host of expensive supply chain disruptions. Consider the solution as "Lean Sourcing" - the holistic management of the supply, demand and value chains.
A team of trade associations - The National Tooling and Machining Association (NTMA) and The Precision Metalforming Association (PMA) - have teamed up with the venerable Harry Moser to put forth a Reshoring initiative that will manifest itself as The NTMA/PMA Contract Manufacturing Purchasing Fair. This "greet and meet" show for 50 Buyers to collaborate with 200 custom manufacturers from the US will take place on May 12, 2010 in Irvine, CA (select link above for details).
According to the group:
"The Fair is intended to change the sourcing paradigm from “Off-shored is cheaper” to “Local reduces Total Cost of Ownership” and will focus on machined, stamped and fabricated parts, special tooling (dies, molds, jigs, fixtures and gauges) and special machines. Work now being produced domestically is also welcome.
The government and media have focused almost exclusively on plans to increase exports. This initiative, instead, helps U.S. companies take the home field advantage, since they can be much more competitive in the U.S. vs. imports than trying to export to other countries.
The move to re-shore production has grown increasingly popular in the U.S. in the face of higher transportation and fuel costs, higher wage rates and reject rates in developing countries. Today, large manufacturers re-shore to: Reduce pipeline and surge inventory impacts on JIT operations; Improve the quality and consistency of inputs; Localize manufacturing operations near R&D facilities, strengthening innovation; Reduce IP and regulatory compliance risk and; Minimize carbon footprint.
All while staying cost competitive."
For more on the trend of Reshoring or Backshoring (with props to the NTMA/PMA initiative), check out this recent video from CNBC:
As western manufacturers begin to assess their extended supply chain strategies, it's incumbent on US supply-side manufacturers to assert their value to them.
Supporting this initiative is a good place to start.