An Interview with Reshoring Initiative’s Harry Moser
There are many names for it: localization, near-shoring, reshoring, and onshoring. I’m speaking, of course, of the growing number of companies who are either making a choice to manufacture in America by never offshoring in the first place or moving manufacturing back to America from overseas. An article written by Willy C. Shih and posted to the MIT Sloan Management Review discusses this topic in detail. That article, from August 7th, 2014, What It Takes to Reshore Manufacturing Successfully, begins, “Rising labor costs in China and other emerging economies, high supply chain and logistics costs, and wide differentials in the costs for electricity and natural gas in different parts of the world are provoking a fresh round of relocation of manufacturing and production.”
Chances are, if you’ve Googled the word “reshore” lately, you’ve come across the name Harry Moser. That’s because Moser founded the Reshoring Initiative in 2010 and, ever since, has made it his mission to educate companies to understand their total cost of ownership when offshoring. Recently, I was afforded the opportunity to discuss the Reshoring Initiative with Moser in an effort to find out how it might help some of our customers and prospects understand their total cost of ownership when considering where they source and produce their goods.
Below is a summary of that conversation.
Tony: Tell me about yourself and what drove you to start the Reshoring Initiative.
Moser: I’ve spent 45 years involved in the manufacturing industry in one way or another. My ties to manufacturing date back to my grandfather. He and my father both spent their entire careers at the Singer Sewing Machine factory in Elizabeth, NJ. In fact, as a teen, I worked alongside my father during the summers. Ten years ago, when travelling in New Jersey, I drove by where the plant used to operate and broke down in tears seeing that the production was now all offshore. To me, it was a metaphor of the then current state of the American manufacturing industry, once the strongest in the world. I didn’t want to see more of it disappear. Also, throughout my career I have made promises to the youth of America that there will always be well-paying jobs in manufacturing for skilled workers. I want to be sure to keep that promise.
Tony: What are the goals of the Reshoring Initiative?
Moser: The goal of the Reshoring Initiative is to bring good, well-paying jobs back to the United States and all of North America. At the heart of that is to shift collective thinking from “offshoring is cheaper” to “local reduces the total cost of ownership.” That requires educating companies about the variety of costs that are incurred when offshoring, or their Total Cost of Ownership (TCO). Whether a company is buying from a contract manufacturer in the United States or overseas, there are more costs associated with each transaction than just the purchase price of the goods. We educate companies on what those total costs are in order to help them understand if they could save money by moving their operations or sourcing back to America.
Tony: Can you explain the Total Cost of Ownership (TCO) Estimator that companies use to understand if reshoring is right for them?
Moser: The easiest way for me to explain this is to state that whenever a company moves production from a low labor cost country to a higher one, almost surely, manufacturing costs will be higher. What the company needs to drill into is how much they spend on the overhead cost—travel and oversight, IP risk, impact on innovation, carrier costs of inventory, to name just a few. The TCO Estimator allows the user to plug in their own numbers and helps them to determine if a change is right for them given their exact circumstances.
Tony: What do you view as the single largest challenge in bringing manufacturing back to the United States?
Moser: A skilled workforce to support the jobs that are to be created. This can be combatted by demonstrating the modern state of manufacturing facilities and by changing the image that a 4-year university education is likely to lead to a better career than an apprenticeship or a technical associate’s degree.
Tony: As you know, C.H. Robinson operates within the supply chain of the same manufacturers who the Reshoring Initiative is working to educate around the total cost of ownership. What advice would you give our clientele if they are considering reshoring?
Moser: The main advice that I would give any company is to understand the total cost of ownership. Don’t make any changes until you know that. Once you know the total cost of procuring the goods, it will drive the decision on what is acceptable for your organization. Secondly, understand that it is not an all or nothing situation. There are some companies who own factories offshore and 50% of the products they produce are sold to the Asian market, while 50% are shipped to America. If manufacturing in America makes sense for certain products, bring that manufacturing back to America and sell more from the Asian factory to the Asian market.
In closing, Moser commented that some say a company should reshore because it’s the right thing to do for America. The Reshoring Initiative asks decision makers to do the research in order to find out what is right for the company. If the cost difference is a small margin, then do what you think is right for the country.
Learn more about the Reshoring Initiative and their Total Cost of Ownership Estimator.
Learn more about the MIT Sloan Management Review.