Table 2. Manufacturing Jobs in Year 2016 2000-2003 New Offshoring

New Reshoring & FDI Net Jobs Gained

Annual Average ~ 240,000* 12,000*

~ -220,000

MC: Why would buyers want to bother with reshoring? HM: Tat would allow them to consider their sourcing decisions’ total impact on their company’s P&L and balance sheet, both in the short- and long-term. Tey could represent the interests of all departments instead of acting in a silo optimizing price while ignoring the impacts on quality, deliv- ery, innovation, sales, travel and other factors. Te supply chain is trying to claim a seat in the C-suite. By taking a more holistic approach, they can help justify the seat.

MC: What is the process for buyers of reshoring? How do they come back? HM: Ideally, the buyer should identify the castings that are causing problems of delivery, quality, travel, excess inventory and other issues. Use the TCO Estimator to decide which to source domestically. Ten there are logistical considerations: planning the transition, shifting the tooling, etc. Start with making the right decision on new products.

MC: Please explain the Total Cost of Ownership assessment. HM: Te user answers questions about each source. Te TCO Estimator uses this input data to quantify 30 costs, risks, and strategic factors, which are then added to create the total cost. Te software then projects the TCO for each source for five years based on forecasts for wage increases and cur- rency changes.

MC: What are some benefits of the TCO? HM: Te company starts to recognize the many “hidden costs,” the costs, risks and strategic impacts they typi- cally ignored when they offshored. By doing so, the interests of all depart- ments of the company are represented, rather than having these other costs disappear into overhead.

24 | MODERN CASTING July 2017 2016

~ 50,000* 77,000** ~ +25,000

* Estimated ** Calculated - Reshoring Library Through Dec 31, 2016

MC: There are 30 cost factors for each source. What are some key examples? HM: Freight, duty, carrying cost of inventory, travel cost, impact on inno- vation when engineering and manu- facturing are close to each other and speak the same language, lost orders due to offshore inability to respond timely to order volatility, and the ben- efit of a Made in USA label.

MC: Who are some examples of successful reshoring? HM: GE reshored appliance assembly to Appliance Park in Louisville, Ken- tucky from a contract manufacturer in China. Engineering and manufactur- ing redesigned the product, reducing warranty costs, increasing thermal efficiency and reducing the retail price despite the higher U.S. wages.

Morey Corp. an EMS (Electronic

Manufacturing Services) contract manufacturer in Woodridge, Illinois used the TCO Estimator to convince a U.S. customer that even though Morey’s price was higher, its TCO was lower than a Chinese competitor’s. It

~ % Change -80%

+500% N/A

saved a $60 million order. Hubbardton Forge uses the TCO Estimator to decide where to source die castings. Tey find it worth analyz- ing if the Chinese price is as much as 50% below the U.S. price.

MC: How can members of the industry share their reshoring successes? HM: They can enter the First National Reshoring Award com- petition. The due date to apply is September 1, 2017.

MC: You founded the Reshoring Initiative in 2010. What have the last seven years been like for you as you promote reshoring and the Initiative? HM: It has been great. We are cred- ited with a key role in launching the trend which has taken the country from an annual net loss to offshoring of about 220,000 manufacturing jobs in 2000 to a net gain of over 20,000 manufacturing jobs in 2016. We ap- preciate the support of our sponsors, including AFS, that have made our success possible and made reshoring a well-accepted trend.

For more information on the Initiative, visit And for the TCO go to

Reshoring and FDI’s growth over the last 10 years is shown.

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