I’ve been writing about “re-shoring” and “back shoring” for years. This outfit has been an absolute leader in this effort, thanks to its founder Harry Moser. Here’s their latest newsletter. It seems Washington might, just might, be getting serious about shifting more production home.
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June 2020 E-News: Companies and Politicians Respond to Call for Domestic Production and Sourcing
Tariffs and the pandemic have exposed the risk of global supply chains, resulting in a nationwide call to end our reliance on China and localize supply chains. Companies and politicians are finally listening and responding. This newsletter addresses the actions proposed by members of Congress and individual companies and organizations that are ramping up to meet current challenges.
The Reshoring Initiative has partnered with IMTS to create a comprehensive program ReBuilding the Supply Chain, described below. We have also posted 18 webinars that offer best solutions.
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Domestic Companies Ramp Up for Fast Response
The lack of self-sufficiency that the U.S. encountered with PPE and medical equipment in the face of the pandemic highlighted other areas of dependency, such as defense and technology. There is now a major push to define essential products and retool and reshore production to supply them locally. From rare earth mineral production to PPE to electronics, companies are stepping up and the government is helping.
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For the manufacturing industry, “We’re all in this together” means rebuilding fragile supply chains and rethinking parts sourcing and production. To support these efforts, the International Manufacturing Technology Show (IMTS) and the Reshoring Initiative have launched IMTS.com/SupplyChain, an educational section of IMTS.com. Content includes stories, videos, webinars and podcasts providing the manufacturing industrial base, including OEMs and job shops, guidance on how to rethink, reengage and reestablish its supply chain. Included are stories of how industry has responded and thought-provoking resources on the steps industry and government can take to ensure manufacturing self-sufficiency.
Our blog Reshoring Cases in Response to the Coronavirus also tallies some of these cases and the challenges companies face as they progress. Thus far we are seeing mostly stop-gap, temporary efforts. Where there was almost no domestic manufacturing or industrial ecosystem in place to begin with (as with many essential products such as PPE), there is nothing to ramp up and respond to. We must rebuild an industrial base for essential products so that we can supply ourselves in normal times and quickly ramp up in times of need.
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Political Response: How to Fill the Gaps
Officials Float $25B ‘Reshoring Fund’
Policymakers are considering several measures designed to get essential companies to move their supply chains to the U.S. The article notes that policy makers will have to strike a balance of effective subsidies that do not violate World Trade Organization rules or indulge in crony capitalism.
Defense Production Act
“DFC will have the tools under the DPA to reshore critical industries in our country, advancing our national security and the security of allies all over the world.” -DFC (Development Finance Corporation) CEO Adam Boehler, under the Defense Production Act (DPA)
Lawmaker to Introduce Bill to Help US Manufacturers Move Out of China
Rep. Mark Green (R-Tenn.) is set to introduce a bill to help companies move their manufacturing from China to the U.S. To lure companies to the U.S., the bill would allow firms to deduct the entire cost of capital spending associated with relocating from China. The bill would pay for this with money collected from U.S. tariffs on Chinese imports.
Trump administration pushing to rip global supply chains from China:
In addition to more tariffs on China, the U.S. “is pushing to create an alliance of ‘trusted partners’ dubbed the ‘Economic Prosperity Network,’ [that] would include companies and civil society groups operating under the same set of standards on everything from digital business, energy and infrastructure to research, trade, education and commerce.”
White House preparing executive order requiring certain essential drugs be made in U.S. The executive order proposed by Peter Navarro “will also encourage the U.S. government, including the Department of Defense, Department of Health and Human Services and Department of Veterans Affairs, to only buy American-made medical products.”
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Other Impacts on China’s Dominance in Manufacturing
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A Pew Research survey identifies Americans’ concerns about producing in China. Topping the list is China’s impact on the global environment. China was recently estimated to emit roughly 30% of the world’s total amount of carbon dioxide. However, China produces less greenhouse gas per capita than the U.S. does. This dichotomy points to the need for U.S. action in mitigating the climate crisis and to take a leadership position on this issue.
National Survey of Likely Voters
This survey revealed post-coronavirus consumer sentiment on a wide range of reshoring issues. For example, the majority of respondents view the coronavirus as a bipartisan event, but political responses will affect the elections. In addition, the majority of respondents feel China acted deceptively with the intent to benefit itself and the U.S. needs to end its reliance on China.
Reshoring After COVID-19 Presents Economic Development Opportunities
Here site selection professionals list essential industry opportunities and the specific needs required to attract them to a region.
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Recent Events
In recent weeks the Reshoring Initiative has participated in countless webinars to discuss the impact of COVID-19 and offer advice, tools and resources for manufacturing companies to drive reshoring by sourcing and selling smarter against imports. Please watch one or more of the archived webinars on our website. Recent webinars all have a common core of content. They are customized to the host organization’s focus, e.g. lean, or as shown by the title, e.g. Job Shops and Total Cost. The Gardner Total Cost webinar is one of the best and very helpful for you to get started reshoring.
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