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Recent Activity on the Backshoring Front

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There's been more action on the backshoring / reshoring / onshoring front this week, as more U.S. and western manufacturing OEMs are not only rethinking their extended supply chain decisions - many are acting by taking a hard look at domestic suppliers and shops.

Caterpiller has announced its own reshoring initiatives this week (hat tip: Managing Automation).

And an old warhorse in the manufacturing and machine tool industry is taking an activist stance to push more U.S. OEMs to source production to domestic manufacturers.

Harry Moser, a long-time executive with Agie-Charmilles, and one of the smartest and energetic people I've ever met. I first met Harry years ago in a previous professional gig, and I was always impressed with his passion. At the time, Harry was a champion for training the next generation of young people to enter and sustain manufacturing.

Some work may indeed be best suited for offshoring, but some work offshored may be best to repatriate.

Some work may indeed be best suited for offshoring, but some work offshored may be best to repatriate.

Today, Harry's applying that same energy and drive to spreading the reshoring gospel (from IndustryWeek):

"Reshoring is bringing back work, parts or tools that will finally be used in North America," Moser explains. "In other words, we're not saying that you should make everything here and ship it to China to assemble. We're saying if you have an end component that is sold into the North American market or assembled into a product at a North American factory, or a tool that's used in North America, and you're now having that work done overseas, to evaluate the total cost of that subassembly or tool in the States versus overseas. We believe you will decide more should be sourced here."

This is another part of Harry's character that distinguishes him from others carrying the banner of backshoring - he is pragmatic by nature. Instead of a knee-jerk, xenophobic argument, Harry understands that offshoring is practical in many cases - it's the natural progression for any industrial economy to evolve. But to be intellectually honest and maximize profits and value, companies must consider all options carefully:

Too often, Moser says, manufacturers decide to offshore manufacturing work because the freight-on-board costs are lower for work done overseas. However, if those companies factor in the costs of regulatory compliance, potential intellectual property loss, visits to overseas vendors, potential product quality problems, high foreign wage inflation and carrying extra inventory as cushion against late or damaged shipments, "now the gap is favorable or small enough that it makes sense to reshore that work."

But leave it to Harry to kick the volume up on the topic of onshoring. Instead of interviewing for an article and leaving it at that, he's applying his energies in tangible ways - by way of a series of purchasing fairs that aim to connect OEMs with domestic suppliers:

The goal of the fair is to match OEMs that are outsourcing machined components, stampings, special tooling and assemblies with U.S. suppliers that can most competitively bid on doing the work on domestic soil. Moser likens the logistics of the event to speed dating, and he notes that the organizers are creating a Web site that will enable OEMs "to post files of their actual work, a print of the part, a description of the mold or die, and the quantity needed, etc., so vendors can figure out which customers they're best-suited for so that we can do a better matching process."

 

If all goes well, Moser hopes to hold several reshoring fairs each year throughout the country, with a broader product focus. He points out that the goal of the fairs, aside from bringing work and jobs back to the United States, is to change people's thinking.

I spoke at a Best Shops & Plants conference a few years ago, where Harry was also on the program speaking passionately about how U.S. small- and medium-sized manufacturers (SMMs) could, in fact, effectively compete with low-cost foreign manufacturers.

If anyone is gonna see this through and keep at it, it's Harry Moser.

Can you make this part?

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