Bringing manufacturing jobs back to the United States was a major theme of Trump’s 2016 presidential campaign.
About a year ago, he promised to renegotiate or withdraw from NAFTA and TPP, impose tariffs on goods made in China and Mexico, and create more manufacturing jobs.
In the first quarter of 2016, The Reshoring Initiative reported 10,000 manufacturing jobs coming back to the United States. By the end of that same year, 32,000 jobs were announced. There is no doubt Trump’s campaign rhetoric brought more light and attention to an already growing trend. Now, as president, he wants to make good on his promise of more jobs.
President Trump recently signed a federal apprenticeship program stating “Under our plan, young Americans will have a pathway to exciting and fulfilling careers. They will become brilliant technicians who revitalize American manufacturing.” But what will be the effects and will it accelerate growth?
According to Politifact, The Reshoring Initiative’s founder Harry C. Moser is optimistic that Trump can have a positive effect if he’s willing to see it through for the “long haul.” On the other hand, Princeton University economist Alan Binder believes that “a small number of manufacturing jobs could be brought back, but probably at an enormous cost.”
We surveyed our community of 11,000 manufacturers in the apparel, jewelry, and home industry to better understand some of the real costs and concerns of moving production back to the United States.
#1 Reason people are moving over: Convenience & Quality
Factory owners reported an increase in inquiries based on the concern about the Trump campaign rhetoric around tighter import laws and heavier taxing. However, the fact that jobs were already transitioning back to the United States indicates a greater reason for production in USA. Kevin Coon, CEO of TyNik Molding, Inc. explains the convenience of visiting the factory influences the quality of the intended product: “Lower cost to visit facility, easier to monitor. Much easier to fix problems as they arise. Less lost in translation, less confusion. Less likely there is contamination in the product…”
Some other common responses were “Chinese transitioned to focusing on tech, forsaking apparel and textiles” and “try new styles without committing to large volumes.”
#1 Benefit of Transitioning: Flexibility
If your production is also in your market, it makes it easier to test trends without having to commit to large volume. John of Paddy Lee Fashions shared domestic production means “speed to market, can test new trends and style s quickly.” Similarly, Rocio of Unlimited Design Services explains flexibility as “Domestic production allows brands to react to change a lot quicker and without having to worry about import duties or communication barriers domestic production offers more transparency.”
More, frequent responses included small batch production/low minimums and quality control.
#1 Challenge of Transitioning: Cost/Pricing
Cost/pricing was undoubtedly the toughest challenge of transitioning production back to the United States. Kevin Coon warns that you will probably take the biggest hit with “initial costs & how that affects their product pricing.” While Beulah of UA USA Made argues “Finding a factory that can do it for a price they are willing to pay, but finding a factory at all that fits their needs will be their biggest challenge.”
Ezra of Task Force shares another common challenge is communication and time: “there can be a lot more questions to answer with domestic factories. Frequently, international factories are all-in-one and if you don’t provide them with complete information they will go ahead with production anyway and use their own best judgment when design and construction issues come up…The process can be more tedious domestically, but the designer has more control.”
How Much Will Reshoring Really Cost?
When considering an international vs a domestic manufacturer, managers and entrepreneurs often inaccurately evaluate the options. There is so much beyond just pricing that needs to be considered and that will add to the total cost of production.
The Total Cost of Ownership (TCO) Estimator is a free online tool that helps companies account for all relevant factors — overhead, balance sheet, risks, corporate strategy and other external and internal business considerations — to determine the true total cost of ownership. Using this information, companies can better evaluate sourcing, identify alternatives and even make a case when selling against offshore competitors.
In celebration of American Factory Week, we’re offering 20% off our Standard plan for factories and Essentials plan for brands! Click here for more information!
GET NOTIFIED WHEN WE POST A NEW ARTICLE!
