Posted on

Macro events drive interest in reshoring, nearshoring production – Furniture Today

Macro events drive interest in reshoring, nearshoring production - Furniture Today

Rosemary Coates said the reshoring movement offers more security in a frenetic supply chain environment.

By Powell Slaughter, Contributing Editor

WILMINGTON, N.C. — Changes posing risks to the global supply chain during the past 10 years are spurring moves to bring manufacturing back to the United States, or at least North America.

That was the take during a presentation at the AHFA Logistics Conference by Rosemary Coates, president of Blue Silk Consulting and executive director of the Reshoring Institute, a nonprofit, nonpartisan organization she founded in 2014 focusing on expansion of U.S. manufacturing. She discussed the potential opportunities for furniture manufacturers looking to produce goods and source materials closer to home.

Coates called the 2012 U.S. presidential election, when both major candidates claimed commitment to bringing jobs back to the United States, as the catalyst of the reshoring movement.

Since then, macro events have spurred the trend. Examples cited include geo-politics, China-bashing in America and a corresponding reaction from Xu Xinping in China; global counterfeiting of products; lean manufacturing processes such as just-in-time inventories at greater risk to long supply chains; the rise of ethno-centrism; trade wars including the Trump administration tariffs; and now the lingering coronavirus pandemic.

She noted that several industries already face critical shortages of rare earths and neon gas (electronics and semi-conductors), and pharmaceutical building blocks that have been sourced abroad for years due to lower operations costs in places such as China. Coates said rare earths are found worldwide but are more expensive to extract here.

“In the U.S., we tend to let the market rule, but if we can’t make our own building blocks for pharmaceuticals, we can’t make antibiotics in North America,” she said, if those products are delayed or not available via the global supply chain.

Furniture makers have been plagued by similar shortages of mechanisms, kits, textiles and other inputs sourced offshore during the past two years.

Reshoring takes more than just shifting production to make economic sense, and Coates offered examples of what works and what doesn’t.

General Electric engineers, for example, developed a specific product for U.S. manufacture — the Geospring on-demand water heater targeting a higher end market — that commanded a price making its more expensive domestic production feasible. The company re-opened GE Appliance Park in Lousville, Ky., after a 20-year closure, utilizing new automated and highly engineered production lines.

“They put 4,000 people back to work in Louisville by developing a product that can be manufactured in the U.S.,” Coates said.

She offered the case of Otis Elevator as a reshoring failure. The company brought a production line back from Mexico in 2012 when it opened a new plant in Florence, S.C.

“It was highly automated, but they couldn’t find skilled workers,” Coates said, adding there was no partnering with local schools and colleges for worker training. It didn’t help that the opening was concurrent with an ERP implementation. Production delays cost Otis $60 million in lost business.

“If you are going to reshore, you need to know what sort of products you can make, who’s going to run it and what skills you’re going to need,” Coates said.

See also: