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9 comments

Are You Ready for the Re-Shoring Backlash?

Posted September 21, 2011 4:04 PM by geanorm

Editor's Note: CR4 would like to thank Larry Butz of GEA Consulting for contributing this blog entry, which originally appeared here.

In case you haven't noticed, there is a Tsunami approaching called the "Made in America" backlash. Evening news reports statistics about companies bringing home production that had previously been outsourced to low wage countries. With the US unemployment rate stubbornly remaining near double digits the outrage is increasing.

A recent Gallup Poll found that 72% of Americans are paying "heightened attention" to the country of origin of the products they buy and 65% are making an effort to specifically avoid products made in China.

The Poll revealed that nearly 94% of Americans would pay more for foods grown or produced in the United States of America. 60-70% of those polled said they were willing pay more for household appliance, home products and clothing. 50% of all American said they would pay more for domestically made electronics.

Just looking at the number of articles using the term "back-shoring" or "on-shoring" shows a ten-fold increase between 2008 and 2010.

Unemployment is but one factor. Hidden costs, delays, technology protection, slow change implementation and currency risks have caused many companies to reconsider their sourcing strategies.

The Reshoring Initiative, founded by Harry Moser provides a focal point for companies and individuals wanting more information. In an attempt to truly understand the costs of offshoring the Reshoring Initiative has developed a Total Cost of Ownership (TCO) Estimator which is software is free and it was designed to help OEMs and manufacturers compare the TRUE Total Cost of Ownership.

Are You Ready to Take Advantage? Do you have products that can meet the rising preference for Made in America? It is real. Consider for example, the US Patent Office announced on August 29th the certification of the first independent third party, certification company for the "Made in USA", "Product of USA" and "Service in USA" claims.

This may appear to be a niche market at best but has the word opportunity written all over it.

- Larry Butz

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#1

Re: Are You Ready for the Re-Shoring Backlash?

09/21/2011 11:59 PM

¡Autarky!

(That's the word for today.)

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#2

Re: Are You Ready for the Re-Shoring Backlash?

09/22/2011 5:25 AM

Shore as a verb:-
To support by placing against something solid or rigid. E.G To shore up a building.

Thus Re-shoring does not mean what the blogger thinks it does.
In fact it's a nonsense.
We have a perfectly good language with plenty of appropriate words.
Del

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#3
In reply to #2

Re: Are You Ready for the Re-Shoring Backlash?

09/22/2011 6:31 AM

Yeah, but how do you resell old concepts (I mean new ideas) to business without inventing new words to go with them?

Six Sigma was the pinnacle of that era.

Let's call it re-disambiguation.

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#4

Re: Are You Ready for the Re-Shoring Backlash?

09/22/2011 7:29 AM

As exciting as this sounds, I could see a backlash coming from this whole concept. It's going to take more than a label to turn anything around.

Made In The USA, with cheap Chinese components, will accomplish nothing. Junk is junk. Even if things are wholly made in the US, and they are made cheaply in an attempt to compete with Chinese prices...............junk is junk.

There is only one area that the US, or anyone else for that matter, can beat the Chinese.......................quality.

You're an HVAC guy. Here's an example: I've got a 4 ton Sears Kenmore AC unit in my yard that was installed in 1986. I've replaced the fan and a couple of capacitors, and it's still going strong. The original capacitor went out 2 years ago. Capacitors are no longer made in the US. I've replaced 2 foreign made ones in the last two summers. $17 dollars a piece. Find me one like the original, and I'll pay $50 for it.

Tell me where I can get another unit like this, and I will gladly pay $500-$600 more for it.

There is an incredible lack of quality in almost everything these days. That is where the opportunity lies.

Slapping a, Made in USA, label on junk that happens to be made here, without the quality to back it up, will accomplish nothing, and in fact will only further serve to erode our reputation in the long run.

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#5
In reply to #4

Re: Are You Ready for the Re-Shoring Backlash?

09/22/2011 11:41 AM

We had a high failure rate with Chinese made motor run capacitors even when using higher voltage rating than necessary. We looked for NA or European made that were compatible. We found that Cornell Dublier made some in Mexico. It solved the problem. No more failures.

By the way, they do cost a little more but I am happy to pay for better quality.

We simply have to convince the rest of the society the it is worth to pay for better quality and the tide will turn.

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#6
In reply to #4

Re: Are You Ready for the Re-Shoring Backlash?

09/22/2011 4:20 PM

Good Comments.

There are two elements here: the emotional (anger, frustration, fear...from seeing friends and relatives suffering while not being able to find jobs) and recognition by American consumers and businesses that there are additional costs and impacts to their purchasing and outsourcing decisions. Saving 35 cents at the store contributed to cousin Bob's loss of job and house.

Companies are becoming more aware of the hidden costs with the help of detailed itemizers like the Total Cost Estimator listed in my posting. Flying to Shanghai for vendor audits and negotiations isn't the same (cost) as flying to Ohio.

Interestingly, the one company certifying "Made in America" requires "all or virtually all of their core components manufactured or grown in the United States of America as well as 100% of the assembly, must be conducted in the United States". Not easy for manufacturers of HVAC equipment with a broad number of components and materials. I do believe however, there is a middle range where "mostly American" products would be preferred.

On the 25 year old Kenmore running in your back yard, please don't buy anymore $17 or $50 capacitors. Dig to pull together enough to buy a new unit. It will cut your electricity usage in half. And depending where you live consider a heat pump rather than just a cooling only unit. Technology improvements have made the reliability, (heating) performance and cost very attractive.

Larry

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In reply to #6

Re: Are You Ready for the Re-Shoring Backlash?

09/22/2011 4:43 PM

Nice first post!

Welcome to CR4!

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#9
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Re: Are You Ready for the Re-Shoring Backlash?

09/23/2011 10:29 AM

Welcome aboard larhere.

Here's the rub.

The Made in America label will mean absolutely nothing without quality attached to it. I'm not going to purchase US made junk because I'm proud to be an American. I will happily pay a premium for quality products, I don't care where they come from.

I have to disagree with your advice on my old AC unit. I run it for 3 months a year. The new units have a life expectancy of about 8 years. SEER ratings mean nothing to me with that kind of life expectancy.

I keep my house at about 69°-70°F during the summer at a cost of about $3-$4 a day. The outside temps hover around 100°. There is no way I can work the math to justify a new unit.

I will say this.............If the day comes that Chinese made products are associated with quality..................the rest of us are finished.

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#8

Re: Are You Ready for the Re-Shoring Backlash?

09/22/2011 6:15 PM

Here in Australia, we have Chinese cheap microwave ovens that are reliable, but they occasionally blow the magnetron fuse.

A friend had an expensive valve audio amplifier, made in USA, built with quality materials, but it had nuisance fuse-blowing problems on 240V AC 50 Hz. It turned out that the C-core transformer used steel with a sharp knee in the B-H curve. The unloaded trannie ran very close to that B-H knee, and there was some magnetic remenance in the core when switched off. If you switched on the trannie at zero crossing, the initial surge on top of the remenance could saturate the trannie and blow the fuse. The problem was fixed by including an NTC resistor in the primary circuit. Quality intent, but realisation failure.

It has been my experience that only Commercial, Industrial and Military gear made in USA has been spot on, usually because it is CONSERVATIVELY DESIGNED. Domestic gear has had its problems eg fungus growing on bakelite cases, and overheating transformers, when shipped to this part of the world. There will be no guarantee you get the quality you remember from way back, if made in USA. It really will cost. What will the manufacturer do to compete successfully?

The Japanese also used to make good gear, but moved off-shore. Money speaks, unfortunately for quality.

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