Manufacturing Industry Reshoring Iniatives

Last month, we had the opportunity to attend a Technology and Manufacturing Association (TMA) event featuring Harry Moser, president and founder of Reshoring Initiative .  Moser started the Reshoring Initiative to encourage companies to “reshore” and bring manufacturing jobs back to the United States, where they first started.  His talk focused mainly on the benefits of reshoring, why the Total Cost of Ownership (TCO) calculator is key component when making decisions regarding production or manufacturing, and what mainland companies can do to recruit more people to reshore.

Harry Moser, a well known name in the manufacturing industry, graduated MIT with a BS in Mechanical Engineering and an MS in Engineering.  Proceeding MIT, Harry went on to earn his MBA at University of Chicago.  GF AgieCharmilles, a machine tool supplier, was another stop in Harry’s career, starting as President in 1985 and retiring as Chairman Emeritus in 2010.  In the same year, Harry was inducted into the Industry Week Manufacturing Hall of Fame.  Other than Forbes, USA Today, Wall Street Journal and such places, Harry can also be found in Quality Magazine where he is named 2012 Quality Professional of the year.  Moser’s success and ambition landed him the opportunity to participate in President Obama’s Insourcing Forum in January 2012.  In January 2013, he won the Economist debate on outsourcing and offshoring, followed by receiving  the Manufacturing Leadership Council’s Industry Advocacy award just one year later in 2014. With President Donald Trump in office and his goals increase the amount of manufacturing jobs in the United States, we foresee Harry’s Reshoring campaign to be nothing shy of a success.

Harry Moser Headshot

Reshoring (backshoring, insourcing) can be simply defined as bringing the manufacturing and assembly of products back to the United States.  Harry spoke about the many benefits to reshoring, especially emphasizing on localization, producing near the customer.  Making the product in the same place it is assembled, reduces overall costs and lead time. The margin for error only increases when product design and production are separated.  By unifying all teams to work together, including design engineers, mechanical engineers, production and assembly, we are optimizing the efficiency, consistency, and quality of the final product.

Offshore wages are not what they used to be, and steadily on the rise.  Labor wages in China are now four times higher than years past, making the decision to reshore that much easier.  Workers are more motivated when their jobs are being kept within the United States.  Reshoring takes away the fear of losing jobs due to outsourcing.  Also, when products are produced in the U.S., inventories are kept lower for a better turn around, overall leading to more capital. Responsiveness to customer demands is also met at a more timely matter when all parts of production reside in the U.S.

One major point Harry touched on was the benefits of the TCO Calculator (Total Cost of Ownership Estimator), which can be found on the Reshoring Initiative website.  This resourceful and free tool allows companies to enter their own data for a customized outlook on the total cost of their company’s product from start to finish.  With the correct data, this tool is able to compare the costs of products made and purchased in the United States versus countries such as China or Turkey.  Price typically falls into one of the main factors when making company wide decisions.  When used correctly, the TCO calculator often catches many miscalculations and pseudo cost savings that lead to offshore purchasing.  The point behind this tool is show companies that purchasing material and manufacturing over seas is not always guaranteed the best quality or bang for your buck.

Manufacturing in the USA

President Donald Trump wants to “Make America Great Again,” while Harry Moser would like to “Make Manufacturing Great Again.”  Reshoring is the fastest and most efficient way to strengthen the U.S economy.   There are numerous benefits to reshoring, that it almost seems silly not to.  It helps reduce and balance trade and budget deficits.  It reduces unemployment percentages by creating numerous manufacturing jobs, which also helps reduce income inequality.  When products are manufactured in the United States we are  improving the national image.  What a great feeling you get when you see “Made in USA” on store bought products.

The plastic industry and medical device industry have already taken the lead on reshoring, setting a great example for manufacturing.  The last part of Harry Moser’s talk was informing us on how to get manufacturing companies to reshore.  When hiring, instead of using the word “trade” to describe a job or position, call it a profession.  Also, do not use the term “middle skills,” instead use technical skills.  Advise companies to use the TCO calculator to avoid pseudo cost savings that outsourcing advertises.

More manufacturing in the U.S. means more scrap metal!  B.L. Duke supports reshoring and encourages you to too.  For more information on getting involved in reshoring email us at info@blduke.com or call us at 773-778-3000.

Scrap Metal Forecast

The Association of Women in the Metal Industries (AWMI) hosted their annual January outlook meeting focusing on the scrap metal forecast for 2017.  Joseph C. Pickard, Chief Economist and Director of Commodities, at the Institute of Scrap Recycling Industries (ISRI) discussed 2016 markets and spoke about some key issues for 2017.  In general, Pickard is on the same page with us at B.L. Duke.  The scrap industry is long overdue for a good year and we believe 2017 is looking bullish.

Politics aside, I think we’re set for an eventful year and there have been recent promises that may shed positive light on our industry.  Some of these promises include reshoring, reducing corporate tax rates, renegotiating trade deals, increasing infrastructure spending, and more.

In terms of bringing back manufacturing to the United States, the 2016 U.S. Manufacturing Purchasing Managers’ Index (PMI) wasn’t positive overall.  However, the last quarter showed improvement and is worth mentioning.   The Institute of Supply Management’s PMI rose to 54.7 in December 2016 and any number above 50 is a strong number.  The new orders index rose by 7.2 points, the largest increase in seven years.  Not only is PMI looking bullish for the United States, but globally as well.Scrap Metal Forecast

With that said, let’s talk about scrap exports and of course we will start with China, a country we watch closely.  First off, U.S. Scrap exports have significantly dropped in the last 5 years.  In 2011, the U.S. exported $11.5 billion of scrap and in 2015 only $6 billion (47% decrease).  The second largest buyer of U.S. scrap is Turkey and they bought 19% less in 2016. One major reason for is Brexit and the large drop in value of the pound as Britain is Turkey’s second largest importer of scrap metal.  Nonetheless, all U.S. scrap metal exports dropped from $32.6 billion in 2011 to $17.5 billion in 2015 for several reasons, especially due to the value of scrap and the strength of the U.S. dollar.  Side note: some notable countries to keep an eye in the near future for scrap exports are Greece, Bangladesh, Mexico, India, and Thailand.

What about steel production domestically?  In 2016, American Iron and Steel Institute (AISI) estimated raw steel production declined by 0.5% from 2015.  As for 2017, AISI has already reported production is up 5.8% as of January 14, 2017 in comparison to beginning of 2016.  Are trade cases already affecting raw steel production domestically? With less imports, is the U.S. making more steel domestically?  AISI estimates U.S. steel imports declined by 15% in 2016.

Scrap Metal Forecast

Overall the FED is predicting a modest growth in GDP over the next 3 to 4 years and a 1.9-2.3% growth in 2017.  With several indicators, I think we will have an overall bullish year in the metals industry.   With the huge scrap price increase in December and January and with February historically being a soft month, we will  have a soft to sideways month.

For more information on scrap metal pricing and market conditions, email info@blduke.com or call 773.778.3000

Manufacturing-in-US1The Coming Shortage of Skilled Manufacturing Workers

According Harold L. Sirkin, coauthor of the The US Manufacturing Renaissance: How Shifting Global Economics Are Creating an American Comeback book, there is currently a shortage of skilled manufacturing workers in the United States. As many as 600,000 manufacturing jobs need to be filled across the U.S. Sirkin brings up a great point in asking if there is a shortage of skilled workers, “How do you explain the fact that manufacturing wages are not increasing significantly above inflation?” The average hourly wage in the U.S. for manufacturing workers in the past four years has hardly changed.

This so called “shortage” could be due to a variety of different reasons. One of these reasons may be that even though companies are reporting they are hiring, they do not want to hire more employees in a slow economy. Another reason for the shortage of workers is the fact that many companies have cut training programs. However, no matter the reason for this shortage, we need to promote the training of the next generation in order to supply the demand of skilled workers. Sirkin also discusses that “The average age of a highly skilled U.S. manufacturing worker is 56”. Meaning, if there is a shortage of skilled workers, wages would increase and companies would fund training programs again. All in all, hopefully the industry will start to see an increase in manufacturing in the United States sooner rather then later! For more information on manufacturing in the United States, contact B.L. Duke today!

 

Manufacturing-Jobs-Indiana-Article-1In a strange reverse twist on what seems to be the norm in our current economy, some employers in the manufacturing sector are finding that they have a surplus of jobs and not enough qualified candidates to fill them. The problem seems endemic to northeast Indiana,  which boasts the highest concentration of manufacturing jobs in the nation. B.L Duke is a trucking and hauling company that operates in the Chicagoland and St. Louis areas serving the heavy transport and recycling needs of many of these manufacturing enterprises. Shedding some light on why these businesses are having problems finding the right employees may help some young job seekers overcome the challenge of unemployment.

Employers Are Facing a Lack of Proper Skills in Applicants

As CEO of Daman Manifolds, a manufacturer of hydraulic valve manifolds in the city of Mishawaka in north-central Indiana, Larry Davis has a problem. “We need to hire 10 more workers in the next six months,” he says. “I’ll have to go through 500 applicants just to get the 10 that I need. And there’s no guarantee that those 10 hires will work out.” Many of the candidates look idyllic on paper, but turn out less so later in the hiring process. Drug tests unfortunately weed out many of the applicants, and Davis states that many candidates don’t even finish filling out the 8-page application required by the company. He also says that the company is wary to accept college graduates who apply, because they feel that once something better comes along, they’ll quit, wasting the time and resources it took to train them.

Many of the applicants simply lack the technical skills required to complete the jobs at hand. Matt Bell, president of Corporate College, a part of the Ivy Tech Community College of Indiana, says that 5-10% of manufacturing jobs go unfilled because people just don’t have the right skills for the task. Many workers end up coming from Ohio and Michigan because Indiana’s workforce just isn’t as qualified for the positions. The key to success for many Indiana jobs seekers is education at a qualified technical school.

B.L. Duke Works As Hard As You Do

Businesses need reliable shippers to take care of their product, recycling, and demolition needs. If you would like to learn what B.L. Duke can do for your business, we would love to speak with you.

Many experts claim that the economic recovery that’s been recently fueled by U.S. manufacturers is not only slowing down, but that it’s almost at a standstill. There are many factors that indicate such a possibility, but no definitive conclusions have yet emerged.

The Factors

Because of the overall instability of the global marketplace, exports are down across the board. Additionally, the uncertainty surrounding the outcome of the presidential election in November leaves manufacturers wondering about taxes and potential government contracts. With an ongoing stalemate over government spending and tax policy, as well as concerns over Europe and Japan’s ailing economies, it’s not quite clear what is the best way forward. One positive sign is that the housing market seems to be making a recovery, but this alone won’t be enough to add much-needed stability.

A Slow Descent?

Some economists — like Josh Shapiro, the chief economist for MFR Inc. in the United States — believe there is a 50% chance for another recession in the U.S. over the 12 next months. Many experts argue that it’s not Europe or Japan that should be fretted over, but the deadlock in our own government when it comes to taxes and spending that is the biggest threat. If Democrats and Republicans are unable to reach an agreement, then the scheduled tax hikes and deep spending cuts poised to begin next year could be the triggering event for a “fiscal cliff.”

Because many manufacturers maintain contracts in the defense sector, the potential $500 billion in cuts over the next 10 years create more doubt than confidence at home. Despite posturing on both sides of the aisle, experts know that the best approach for now is to wait it out and see what direction the next administration will dictate.

B.L. Duke is a Leading Industrial Service Company

Originating as a trucking company in Chicago more than a decade ago, B.L. Duke has deftly evolved with market trends over the years. Recognized as experts in recycling, demolition, and heavy hauling, we maintain operations in Chicagoland and St. Louis. Committed to serving area businesses as well as the environment, we offer a wide range of services to provide maximum efficiency for our clients.

Manufacturing-Expansion-Article-5Despite the still shaky economic recovery, there’s definitely some good news out there: American manufacturing is on a steady and consistent rebound according to the Institute of Supply Management (ISM), a not-for-profit research organization that compiles data to determine the rate of manufacturing output from month to month. Their conclusion? They show steady increases in both their manufacturing and employment indices.

Such healthy performance is an excellent indicator for the U.S. economy at large, but it has also come at the price of a paradigm shift in what it means to be a manufacturing worker in America.

The Globalization Factor

The advent of globalization means that GM is no longer just competing against Ford — Americans are competing against manufacturing workers abroad, whose lower hourly rates simply can’t be matched. With free trade agreements often bolstering the success of these foreign workforces, the only solution for the American brand of manufacturing has been to adapt.

The modern U.S. manufacturing job is no longer about working on the factory floor; instead, most U.S. jobs in production have transitioned to offices. Manufacturing positions requiring a college degree or trade skill are the strongest factor in keeping jobs here in the U.S., because educated workers can’t be so easily outsourced. By elevating the value of the average worker through education and training, U.S. manufacturing plants once again become the preferred place to do business in a world market, and American labor avoids the problem of competing with foreign workers altogether.

Embracing the Future of American Manufacturing

As with any big change, this notion is bound to be met with some resistance, and it will require action now on many levels in order to be successful in the future. Manufacturing companies and labor unions will need to work together to redefine the American workforce. Some important factors and changes will include:

  • Implementing advanced manufacturing techniques
  • Reducing material and overhead costs
  • Encouraging more well-trained employees

If the ISM is to be believed, a new boom era of American manufacturing is on the horizon — the question is simply whether or not we will continue to embrace the evolution of the industry. At B.L. Duke, we work on the cutting edge of the recycling, hauling, and demolition industry, employing the latest machinery and techniques to achieve the most sustainable, eco-friendly solutions for our clients. Contact us today for information about any of the