Why Manufacturers Operating Offshore Must Consider Total Cost of Ownership – Part Three

by Taras Berezowsky on June 16, 2011

Style:    Category: Commodities, Logistics, Manufacturing, Metal Fabricated Parts, Public Policy, Sourcing Strategies

MetalMiner came across the Reshoring Initiative at a recent IMEC supply chain conference here in Chicago, and has separately touched on reshoring in recent articles. We got in touch with the initiative’s founder, Harry Moser, to clarify just what his firm does, why total cost of ownership (TCO) matters and why it’s important for US metals companies to consider reshoring.

Moser is the retired ex-president of AgieCharmilles, a leading producer of EDM and HSM (High Speed Milling) machine tools; serves on the board of the National Institute of Metalworking Skills (NIMS); and started the Reshoring Initiative in 2009.

(This edited and condensed interview continues from Part Two — check out parts One and Two.)

MM: Have you found anything of note for the metals sector as far as reshoring is concerned?

HM: There are repeated stories about the developing countries putting out metal that wasn’t properly specified, i.e. the specs are wrong meaning you’re not confident in it. Often, incorrect metal is being substituted. Specification [standards aren’t] as tight as in they are in the US. Mold makers here say that Chinese molds don’t last as long.

MM: What are the main risks involved in reshoring?

HM: There’s the risk that the dollar could strengthen. When that happens, offshore production will become relatively more attractive. Unionization is also more of a problem here than in emerging countries but they can be helpful. I’m currently working with IUE-CWA to train people on how to manage reshoring. They have a program for more companies to become lean.

MM: What’s your take on training the next generation for US manufacturing jobs?

HM: The US does not do the best job on training Germany and Switzerland do better. They set up apprenticeships, and we have the shortage of those. Those countries have better trade balances. The biggest problem is recruitment. Everyone wants to be lawyer, doctor, or a reporter to make their money. The US universities have such pull that a third of their students would never go into [technical/manufacturing training programs] … One reason the smart kids don’t get into manufacturing is that they hear about all the work going offshore, so why would they get into it? We need a society committed to bringing work back here, and [make it known] that there’s a future here.

Our thanks to Harry Moser for his time and insight. Moser has worked with the Morey Corporation and Hydraforce, among other companies, in helping them consider reshoring options. For more on how to access the Reshoring Initiative’s Free TCO Estimator, go to their Web site or send an email to harry(dot)moser(at)comcast(dot)net

–Taras Berezowsky

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