Small Manufacturers Giving Up On China

Last week Bloomberg BusinessWeek published an insightful article on the hassles of small manufacturers with their China businesses.

The jobs, not the products, are starting to return to our shops in North America.

“American production is “increasingly competitive,” says Harry Moser, founder of the Reshoring Initiative, a group of companies and trade associations trying to bring factory jobs back to the U.S. “In the last two years there’s been a dramatic increase” in the amount of work returning.”

“As costs in China rise and owners look closely at the hassles of using factories 12,000 miles and 12 time zones away, many small companies have decided manufacturing overseas isn’t worth the trouble.”

Our shops are seeing an increasing number of opportunities to manufacture products that were previously made in China.

Our consistent quality, agile ability to implement design changes, and faith in the raw materials to meet spec here in North America are helping our shops win this business back.

Freight costs continue to climb, and holding costs for the larger amounts of inventory needed to fill a  shipping container are also factors in the Make Here or Buy There decision.

The Boston Consulting Group predicted Cost Parity with China by U.S Manufacturers in 2015.
Many Precision Machining Shops are finding that they are competitive today.

Thanks to Bloomberg for the Article

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6 Responses to Small Manufacturers Giving Up On China

  1. terry krauss says:

    This is an excellent trend and bodes will for restoring jobs for USA middle class and military veterans, which we so desperately need. I am working with Harry Moser to establish a movement toward reshoring in NC – see Linked In group Reshoring North Carolina Jobs. It is slow getting it going and the more members we have adding comments the better. Ideally we want to establish a non-profit to support companies with this initiative, by providing training toward improving operational results to enhance competitiveness and accelerate reshoring.

  2. David Wolski says:

    Yes, a number of “no brainer” outsourcing decisions have become a bit “gray” but companies need to do more to mitigate supply chain risk.

    • speakingofprecision says:

      Not sure that redundancy is the answer to the problem. it increases variability, and raises number of nodes by a power factor. Nor are the shops that we serve in a position to make those choices. Our blog is for the precision machining companies, not aimed at the OEMS who continue to shoot, hit something, then tell us that was where they were aiming the whole time. Thanks for your thoughtful comment David.

  3. Darryl Crum says:

    I don’t believe we are ready for this. I may be wrong, but I think many of the problems that existed prior to the jobs going offshore still exist. We have to significantly improve the way we train employees. In 2011, the national average for students who were enrolled in high school to graduate on schedule was 71.7%. In some states, specifically some southern states, the percentage was below 60%. The number of workers entering the workforce whose mother tongues are not English exceeds the native workers. Both of these groups, the people who are not graduating on schedule and the non-natives have special needs when it comes to training. What are we doing what are small businesses doing, to accommodate that?

    • speakingofprecision says:

      Thanks for sharing your thinking with us Darryl. I’d love to share more of your thinking with our readers.
      Miles

  4. For labor intensive work, off shore should be considered.

    Overall though, I see advances in technology decreasing the need to go off shore.

    These advances are decreasing the labor cost to the point where labor is no longer the driving factor.

    If you look at the Tactic 8 Linear centerless grinder you will see that labor has become the lowest cost driver due to it’s design.

    No previous grinding experience is necessary and very little operator or set time is required to run this machine.

    By using the advancements that are now available to them US and Canadian companies can be very competitive in markets that were once lost to them .

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