Apple’s (NASDAQ: AAPL) recent announcement to give manufacturing companies in the US some production of its Mac computers has received plenty of media attention as well as excellent analysis of the rationale companies give for re-shoring.
Whether that decision to move production back to the US has more to do with customers demanding a Made-in-the-USA label, poor overseas quality, lack of labor cost savings or some other supply risk, we can’t say for sure.
But one thing is certain: Re-shoring is welcome news for aluminum producers, given aluminum’s important role in thermal management.
MetalMiner recently spoke with Steve Jackson, business development manager of thermal management for Sapa Extrusions North America, about some of the trends his manufacturing organization has seen.
MetalMiner: Have you seen any renaissance of manufacturing in the US due to re-shoring?
Steve Jackson: Yes, this is a trend we have been seeing for the last several years. It has really picked up this past year. Companies are shifting the production of products from Asia back to North America. We work with a large lighting manufacturer that has closed down LED facilities in Asia, in the process bringing the production of 3 million pieces of aluminum back to the US. We are seeing this across the board. We’ve also seen a significant increase in RFQs related to the aluminum industry – ranging from lights to computers, cases to enclosures – that would have gone overseas a few years ago.
MM: From an industrial metal industry perspective, why did your customers go offshore in the first place? How has that changed?
SJ: Twenty years ago, customers seeking die-castings-and-stampings solutions often looked overseas, usually because of North American tooling costs. For example, a die that might cost $70,000 to make in the US could be produced for $20,000 in Asia.
That has all changed. In North America, our tooling industry had a big shakeup that reduced the number of suppliers. Those that remained became stronger. All extruders and casters have increased productivity. We’ve invested in faster CNC and EDM machines. There isn’t a big savings for the raw material – a piece of aluminum, zinc or steel is pretty consistently priced around the globe – but Sapa couldn’t compete effectively a few years ago because our anodizing and fabrication couldn’t be delivered cost-effectively.
Twenty years ago, Asian producers could do this faster and at a subsidized cost. But today, the customer wants three things – high quality, at a fair price, with timely delivery. North America has become very good and competitive at meeting those customer demands, and US manufacturers can now offer all three: quality, delivery and competitive prices.
The interview continues, covering specific sourcing decisions and a future aluminum demand trend forecast, in Part Two.