Editor’s note: Harry Moser’s
column will appear every other
month. Has your company reshored
production? Are you thinking
about it? We’d like to hear
from you. We would love to report
on your successes or opportunities
in future issues. Contact harry.
For the past several years, the Reshoring Initiative has been helping manufacturers reshore production or keep existing work here through total cost of ownership (TCO) analysis. However, calculating TCO is only part of the overall competitiveness equation.
In his August 2017 editorial, “Tariff Debate Pits Producers Against Consumers,” chief editor John Sprovieri clearly posed the dilemma of low-priced Chinese steel imports, which have severely impacted the U.S. steel industry.
Use the Total Cost of Ownership Estimator (TCO) to make a strong case when selling against offshore competitors! Sixty percent of companies make sourcing decisions based on rudimentary metrics, such as wage rate, ex-works price or landed cost, often resulting in a 15 to 30 percent understatement of actual offshoring costs.
Our government could do a lot more to level the playing field for manufacturing. While the Reshoring Initiative does not support individual candidates, we do recommend policies that will bring manufacturing back from offshore, and we try to document candidate positions on these issues.
My first column talked about why manufacturing matters most for our country. This month, I want to discuss how chasing cheap prices is not only hollowing out domestic manufacturing but, in many cases, it’s making the companies that offshore less profitable. For decades, consultants and MBAs have told companies to focus on their core competencies—mostly R&D, finance and marketing—and outsource manufacturing offshore. Now, companies are discovering that strategy was often wrong.