Made-in-USA label pays off for investors

April 1, 2013 by Leave a comment

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Adam Shell, USA TODAY

NEW YORK — The benefits of the Made-in-the-USA marketing tag now apply to stocks as well as shoes, SUVs and software.

How so? With Europe hobbled by debt, white-hot China cooling and emerging markets slowing, stocks of U.S. companies that get most of their revenue from U.S.-based sales are performing better than companies that do 50% or more of their sales abroad, where things aren’t going as well.

The part of the world where a company makes most of its money can be the difference between a great investment and an OK one. In the past 12 months, U.S. stocks that generate all sales at home are up an average of 18.6%, vs. a gain of 6.2% for American firms that get more than half their revenue from abroad, Bespoke Investment Group says.

“A major theme of 2013 has clearly been a preference for U.S.-centric stocks,” says Paul Hickey, Bespoke’s co-founder. Why? “The U.S., relative to the rest of the world, is the strongest economy.”

That trend helped drive the Standard & Poor’s 500 index to an all-time closing high Thursday and a 10% first-quarter gain.

Domestically focused companies are also sporting better earnings growth, as well as benefiting from inflows of capital from foreign investors that view the U.S. as a haven, Hickey says.

One of Wall Street’s biggest winners this year is media subscription service Netflix, which gets less than 3% of its sales outside the U.S., says S&P Dow Jones Indices. Netflix shares are up 104%. In contrast, tech player Qualcomm, which gets nearly 97% of revenue from abroad and recently warned of slowing growth in Asia, is up 8.2%.

 Nearly half, or 46%, of sales of companies in the S&P 500 occur overseas, says Howard Silverblatt, an analyst at S&P Dow Jones Indices.

Analysts also see positives in the All-American story, as they’ve been issuing more positive earnings revisions than negative ones in the past four weeks.

The U.S. market, and particularly, domestically focused names, have held up better than foreign stock markets recently following the “Cyprus Surprise,” the latest bailout in the eurozone to spook global investors. Also driving the better performance is the spate of better-than-expected economic data this month, which prompted Barclays to raise its first-quarter U.S. GDP estimate to 2.6% from 1.6%.

While U.S. shares have performed better than a broad index of foreign stocks for more than two years, the outperformance has been particularly acute since late 2012, when the U.S. averted a fiscal crisis and election-related political gridlock weighed on sentiment.

“Once the ‘fiscal cliff’ negotiations were settled, U.S. stocks rebounded and haven’t looked back,” Hickey says.

 

source: http://www.usatoday.com/story/money/markets/2013/03/31/american-centric-stocks-sport-big-gains/2022159/

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Hotels bet guests will favor furnishings made in USA

March 15, 2013 by Leave a comment

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Montague Furniture

By:Barbara Delollis USA Today

When you walk into a hotel in the U.S. today, you’ll see many items – chairs, draperies, lamps – that were made in China, Vietnam, Malaysia or elsewhere overseas.

But that’s gradually changing, hotel designers and furniture makers tell Hotel Check-In.

There’s a small but growing trend among hotels to buy more items from local, regional or U.S. vendors.

Hotel owners, developers and designers are increasingly deciding it’s worth it, even if they pay a little extra for a U.S. product.

Why? There’s time and risk involved with ordering items from overseas, plus showcasing locally made goods can give the hotel a patriotic or community-minded spin.

Examples:

  • The Hyatt Regency Minneapolis recently finished a $25 million revamp that used “Made in America” as its central theme. More than three-quarters of the items purchased for the renovation came from the USA, says designer Michael Suomi of New York-based Stonehill & Taylor. The guest bathroom counter tops, for instance, feature granite quarried locally and purchased from a century-old Minnesota company.
  • The Ritz-Carlton Lodge, Reynolds Plantation, in Greensboro, Ga., is in the midst of redecorating to give guests a lighter, more modern look with many U.S.-made products, says Megan Ybarra of the Dallas-based interior design firm Duncan Miller Ullman. The hotel found wall coverings from Kentucky, guestroom carpet from Georgia, and a Texas metalwork firm was hired to custom-make the metal branches that form the base of guestroom ottomans, she says.
  • The InterContinental Chicago’s 477-room renovation emphasizes locally-sourced materials and furniture, says Dan Egan, the hotel’s sales and marketing director. Guest rooms contain drapery from Union, Ill., headboards from Jasper, Ind., wall covering from York, Penn., and room signage in hallways from McCook, Ill.
  • Montague, a 20-year-old guestroom furniture maker, last April invested in its first-ever factory – and it’s located in North Carolina, says Misty Delbridge, who runs the company’s U.S. division. It made sense, because hotel owners are increasingly seeking products made here and the factory was in danger of closing down, she says. A Hilton hotel in Texas, for instance, is having the company prepare two model rooms for a renovation – one outfitted with furnishings made in Vietnam and the other with furnishings made in the U.S., she says. Montague still has about 70% of its products produced in China and Malaysia.

No. 1 priority: Put heads in beds

Another factor driving the growth in U.S.-sourced products is hotels’ rush to renovate in as small a window as possible so that rooms can stay filled with paying customers, says Delbridge. It’s especially true in New York City, where some hotels can be sold out or almost sold out most nights of the year.

“If the cost (to purchase U.S.-made furniture) is 10% higher and the hotel can gain revenue back in six to eight weeks, they’re all about it because then they could have a ‘Made in America’ story and gain revenue,” Delbridge says. “These companies wouldn’t do it just for the story. There’s got to be an advantage in it for them.”

Hotel renovations are faster paced than building new hotels from scratch, notes Ybarra, who worked on the Ritz-Carlton Lodge project. It typically takes about 18 months to renovate a hotel, which since the recession has been the most common activity among hoteliers, vs. about three years to build a new one, she says.

“Our clients are willing to pay an extra dollar or two to not have the hassle of waiting,” Ybarra says. There’s also the risk of complications, she says, citing long waits at U.S. Customs and a time when pirates took over containers filled with items for a Turks and Caicos hotel.

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What it Really Means to be Made in the USA

February 26, 2013 by Leave a comment

DWM logo

You often hear companies touting their products as Made in America. Recently, DWM magazine looked at the Federal Trade Commission’s “Made in USA” Act which was designed to give the agency “the power to bring law enforcement actions against false or misleading claims that a product is of U.S. origin.” But other programs are in place as well to help consumers make informed decisions and this includes, Made in USA Certified®.

Made in USA Certified® is the only registered “Made in USA Certified” Word Mark with the U.S. Patent and Trademark Office, according to the organization.

“When we say it’s ‘Made in USA,’ you can count on it,” says Julie Reiser, president and co-founder.

Any company bearing one of the USA-C™ seals has gone through a rigorous supply chain audit to ensure that the product and processes originate in the United States of America.

The designation is an independent certification system that applies proprietary audit criteria consistently across companies, and criteria are checked through the company’s supply chain. “The seal says the company has committed to American jobs and to the American economy,” says Reiser. “Displaying the seal gives consumers the option to visibly support products and services of the USA.”

The Earthwise Group LLC, a national network of locally owned, independent manufacturers of doors and windows, announced that the organization has recently been recognized as “Made in USA Certified.” The organization is the first and only door and window manufacturer to be Made in USA Certified, according to Earthwise.

Why did they do it? “Number one it’s the right thing to do,” says Mark Davis, executive director, the Earthwise Group. “We have to invest in the American economy, American worker and American jobs. If our economy is going to turn around we have to be more sensitive in investing, and that means ingesting in American products.”

He also says the consumer is more willing today to buy American.

“Due to the economic slowdown we feel that the American consumer is more motivated than ever to buy American products,” he adds. “They are beginning again to take pride in American made products and realize the benefits of that …. They have seen the result of ignoring investing in America.”

So why should other companies look at this program?

“The biggest thing I try to do is educate people that the claim of ‘Made in the USA’ is unregulated. There are so many companies just making that claim,” says Reiser. “The only way the consumer really knows is if the company does a supply chain audit .”

It’s completely different to say it than to prove it, she adds.

“It says a lot about a company’s willingness to remain transparent. For companies it’s a powerful branding tool to distinguish among those who may be making false claims,” says Reiser.

She also adds that purchasing dollars are going to support a U.S. manufacturer and create U.S. jobs “which is at the crux of our problems now.”

“One of the things this does for companies is it distinguishes them against those in their industry who may be making a false claim to gain market share,” she says. “If the company has legitimately gone through the process and awarded the seal that puts them head and shoulders above the competition.”

Source: http://www.dwmmag.com/index.php/what-it-really-means-to-be-made-in-the-usa/

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How Ending Currency Manipulation Will Help Manufacturers

February 26, 2013 by Leave a comment

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by 

Many American economists and policymakers believe that currency manipulation by U.S. trading partners such as Japan and Singapore – and especially China – creates a drag on the U.S. economy and depresses the country’s manufacturing sector.

Currency Manipulation

Currency manipulation by U.S. trading partners such as Japan and Singapore – and especially China – creates a drag on the U.S. economy and depresses the country’s manufacturing sector.

Currency manipulation involves artificially reducing the value of a country’s own currency, in effect providing a subsidy for national exports. Currency manipulators often buy U.S. treasury bonds to prevent their own currencies from strengthening. In the case of China, the country’s trade with the U.S. brings in an excess of U.S. dollars and would normally create a shortage of yuans. But to avoid the yuan’s appreciation and prop up its manufacturing sector, China buys up U.S. treasuries to keep the yuan out of currency exchange markets, thus maintaining an artificially low value.

About one out of every six U.S. private-sector jobs is in manufacturing, 17.2 million in total, according to the National Association of Manufacturers(NAM). However, manufacturing dominates when it comes to U.S. trade goods, accounting for 86 percent of exports in 2011, the U.S. International Trade Commission (USITC) says. So a U.S. trade deficit, exacerbated by currency manipulation, has a disproportionately negative effect on the manufacturing sector.

Robert E. Scott, Helen Jorgensen, and Doug Hall of the Economic Policy Institute (EPI) explain that reviving the crucial U.S. manufacturing sector “requires eliminating a jobs-destroying U.S. trade deficit in goods,” in large part by ending currency manipulation. Currency manipulation, the group says, “distorts international trade flows by artificially lowering the cost of U.S. imports and raising the cost of U.S. exports,” thereby displacing American manufacturing jobs.

Eliminating currency manipulation would reduce the U.S. trade goods deficit by at least $190 billion and as much as $400 billion over three years, allowing the U.S. to “reap enormous benefits” without any increase in federal spending or taxation. This would reduce U.S. unemployment by 1 to 2.1 percentage points and create between 2.2 million and 4.7 million jobs; between 620,000 and 1.3 million of those jobs would be in manufacturing. In addition, U.S. GDP would increase between 1.4 percent and 3.1 percent.

The Group of Seven (G7) top industrial nations is concerned that continued currency manipulation is creating dangerous instability in the global economy. The organization, which is comprised of the U.S., Canada, France, Germany, Italy, Japan, and the U.K., recently saidits members are committed to market-determined exchange rates and “will remain oriented towards meeting our respective domestic objectives using domestic instruments.”

The G7 affirmed that they “will not target exchange rates” – meaning they themselves refuse to be involved in currency manipulation. “We are agreed that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability,” the group declared.

Artificially lowering a country’s exchange rate can make its exports cheaper and promote growth internally, but that only causes problems for other countries because one currency can fall only if another rises. This imbalance, the EPI warns, “could spark a ‘currency war’ – a destabilizing battle where countries compete against one another to get the lowest exchange rate.” This scenario “conjures up images of the 1930s, when countries pursued tit-for-tat devaluations in order to get an edge… the outcome was to decimate global trade, accentuate the depression, and sow the seeds for World War II,” according to the institute.

 

Scott Paul, president of the Alliance for American Manufacturing (AAM), argued that policymakers need to act now to prevent further harm from unfair trade practices.

“Congress is obsessed with the wrong deficit,” Paul said. “To grow jobs and boost the economy, we must eliminate the trade deficit. Ending currency manipulation will get us part of the way there, but we also need a smart manufacturing policy, one that focuses on innovation, public investment, skills, and trade enforcement.”

According to the EPI report, any U.S president could end currency manipulation with a stroke of the pen: “The president could simply declare that the United States will no longer sell Treasury bills and other government assets to China and other countries that refuse to allow the United States to purchase their government assets… Refusing to sell assets to currency manipulators would eliminate the principal tool used by foreign central banks to manipulate their currencies: purchases of Treasury bills and other government securities…”

Olli Rehn, top monetary affairs official for the European Commission (EC), told the Associated Press that joint governmental efforts are needed to fight the adverse effects of “excess volatility and disorderly movements” in exchange rates. “That’s why we need to lean on active international policy coordination in order to prevent a wave of competitive devaluations.”

 

 

Source: http://news.thomasnet.com/IMT/2013/02/26/how-ending-currency-manipulation-will-help-manufacturers/

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Woolrich counts on ‘Made in the USA’ product strategy

January 31, 2013 by 1 Comment

woolrich

How refreshing.

How bold.

That’s our initial reaction to the announcement last week by Nicholas Brayton, president of Woolrich Inc., that the over 180-year-old company headquartered in the quaint village of Woolrich since 1830 plans to introduce a 100-percent, American-made apparel collection this coming fall.

Not that Woolrich hasn’t done this before.

But if ever there was a time when American consumers need to rally around a company that has decided to bring some of its overseas apparel manufacturing back home, it is now.

In a letter to all of Woolrich’s customers, vendors and employees, Brayton announced Woolrich also will:

- Increase the yardage of wool produced in the woolen mill in Woolrich by 50 percent this year.

- Increase the firm’s American-made product offerings by 2015, ensuring that more than 50 percent of Woolrich woolen garments “proudly include American made wool.”

“In the coming months, for Woolrich to set and accomplish these goals, it’s going to take more than a company commitment. It’s going to take support from our loyal customers as well,” he said.

Details, we’re told, will be forthcoming as The Express has asked for a direct sit-down with Mr. Brayton to discuss and then report Woolrich’s ambitious plans so far as the privately held company is willing to reveal them.

Dear readers, if you missed Mr. Brayton’s letter published here last week, his words should be revealing and, honestly, quite profound to you in an age when many U.S.-based manufacturing companies have their products made on foreign land to reduce costs.

That has, over the past several decades, taken jobs from Americans.

Woolrich has been no exception.

Faced with a tough sales environment and working to cut costs to remain (as Mr. Brayton said) “relevant, competitive and solvent,” Woolrich has, in recent months, reduced its employee numbers and moved its design team from its local headquarters to the fashion capital of New York City.

Licensing its brand and various products has been a lifeline created with its licensing partner, the Italian firm of WP Lavori. Federal contracts to provide apparel and blankets to the U.S. military also have played a key role.

It’s a darn shame Americans aren’t more loyal to “Made in the U.S.A.” products.

They profess they are, but when they walk into a store, well, the sale of imported products show otherwise.

“In today’s world, the hard reality is that making things here is hard to do,” Mr. Brayton said.

Bringing more wool to the local mill should breathe new life into the longest, continuously running woolen mill in the U.S., which has been operating with a skeleton crew.

Among other things, Woolrich must ramp up marketing of its American-made apparel line of men’s and women’s outerwear and, perhaps, sportswear – something that can be very costly.

It should be a risk worth taking.

The “Original Outdoor Clothing Company” has among the most famous brands in the world, born when John Rich traveled from camp to camp in a mule cart during the great logging era of Central Pennsylvania to sell woolen fabric to loggers and their wives to make clothing.

Woolrich Inc, the “iconic American institution with a heritage that spans over 180 years,” is proudly “eager to begin writing the next chapter of the American manufacturing story.”

 

Made in USA Certified Inc.

MADE IN USA CERTIFIED LOGO

 

source:http://www.lockhaven.com/page/content.detail/id/543349/Woolrich-counts-on–Made-in-the-USA–product-strategy.html?nav=5004

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Walmart to Boost Sourcing of U.S. Products by $50 Billion Over the Next 5 Years

January 16, 2013 by 3 Comments

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NEW YORK, Jan. 15, 2013 – Walmart today announced bold commitments to increase domestic sourcing of the products it sells and help veterans find jobs when they come off active duty. Speaking at the National Retail Federation’s annual BIG Show, Walmart U.S. President and CEO Bill Simon also announced the company is helping part-time associates who want to be full time, make that transition.

“We want all of our associates to find the career opportunities they want with Walmart,” said Simon. “We will make sure part-time associates have full visibility into full-time job openings in their stores and nearby stores, and that they always have first shot at those jobs. We will also bring more transparency to our scheduling system so part-time workers can choose more hours for themselves.”

U.S. Manufacturing

On domestic sourcing, Walmart and Sam’s Club will buy an additional $50 billion in U.S. products over the next 10 years. The company will grow U.S. manufacturing on two fronts: by increasing what it already buys here – in categories like sporting goods, apparel basics, storage products, games, and paper products, and by helping to onshore U.S. production in high potential areas like textiles, furniture and higher-end appliances.

“At the heart of our national political conversation today is one issue: creating jobs to grow the economy,” said Simon. “We are meeting with our suppliers on domestic manufacturing and are making a strong commitment to move this forward.”

A popular misconception about Walmart is where the majority of the products on its shelves are sourced.  According to data from its suppliers, items that are made here, sourced here, or grown here account for about two-thirds of what the company spends to buy products at Walmart U.S. The company sees room to do more.

To help achieve this commitment, Walmart has created a senior team within the company to lead this effort and it will sign longer term purchase agreements to give suppliers more certainty.

“We can do so much more by working in partnership – as an industry and with governments,” said Simon. “I’ve talked with a number of governors, including the incoming chair of the National Governors Association, Oklahoma Governor Mary Fallin, about how governors and retailers and manufacturers can drive this issue together. Governors from both sides of the aisle are enthusiastic about getting their constituents back to work.”

This summer, Walmart will help convene a manufacturing summit for stakeholders to work together and help accelerate these changes.

Veterans

Beginning Memorial Day, Walmart will offer a job to any honorably discharged veteran in his or her first 12 months off active duty. Most of these jobs will be in Walmart stores and clubs, and some will be in distribution centers and the Home Office.

“Hiring a veteran can be one of the best business decisions you make,” said Simon. “Veterans have a record of performance under pressure. They’re quick learners and team players. They are leaders with discipline, training, and a passion for service. There is a seriousness and sense of purpose that the military instills, and we need it today more than ever.”

Walmart’s pledge is not the end of this effort; it’s the beginning. The company projects it will hire more than 100,000 veterans during the next five years.

“We believe Walmart is already the largest private employer of veterans in the country, and we want to hire more,” added Simon. “I can think of no better group to lead in revitalizing our economy than those who have served in uniform. Through their service, veterans give us a land of freedom. When they return, it must be to a land of possibility.”

Walmart has spoken with the White House about this commitment. The First Lady’s team immediately expressed an interest in working with Walmart and with the entire business community to join forces to build upon this commitment. In the next several weeks, the White House will convene the Department of Veterans Affairs, Department of Defense, and major American employers to encourage businesses to make significant commitments to train and employ America’s returning heroes.

“This is exactly the kind of act we hoped would be possible when we started Joining Forces – a concrete example of our nation’s love and support that our troops, veterans, and their families can feel in their lives every day,” said First Lady Michelle Obama. “As our wars come to an end and our troops continue to come home, it’s more important than ever that all of us – not just government, but our businesses and nonprofits as well – do our part to serve those who have served us so bravely.  So today, my challenge is simple: for every business in America to follow Walmart’s lead by finding innovative solutions that both make sense for their workplaces and make a difference for our veterans and their families.  Given what we’ve seen from Walmart and so many other companies over the past two years, we know that they will.”

Simon also called on the retail industry to work together to provide greater career opportunities for veterans.

“Imagine what retail could do together,” said Simon. “We could leave an incredible legacy as an industry. We can be the ones who step up for our heroes. And we can do this now.”

Click here for Bill Simon’s remarks.

About Walmart
Wal-Mart Stores, Inc. (NYSE: WMT) helps people around the world save money and live better – anytime and anywhere – in retail stores, online, and through their mobile devices.  Each week, more than 200 million customers and members visit our 10,400 stores under 69 banners in 27 countries and e-commerce websites in 10 countries. With fiscal year 2012 sales of approximately $444 billion, Walmart employs more than 2.2 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity. Additional information about Walmart can be found by visitinghttp://corporate.walmart.com, on Facebook at http://facebook.com/walmart and on Twitter at http://twitter.com/walmartnewsroom. Online merchandise sales are available at http://www.walmart.com and http://www.samsclub.com.

 

 

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All American Clothing Co. Finishes Record Setting Year In 2012

January 16, 2013 by 1 Comment

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The All American Clothing Co. has survived a clothing industry that has lost -84% of its labor force since 1995 as according to the U.S. Bureau of Labor Statistics.

The All American Clothing Co. announced today that the company has experienced another record year. In 2012 the USA made clothing company’s annual revenue increased 20% as compared to 2011. This marks the company’s tenth straight year of solid growth. A great sign for American manufacturers in today’s economy.

Due to its success the All American Clothing Co. has moved from a 5,000 square foot facility to a 55,000 square foot facility, doubled the amount of its inventory, and has created many new jobs at their headquarters. The American made clothing company now looks forward to a new year full of surprises in 2013 as they continue to grow and create jobs for American citizens.

About All American Clothing Co.

Lawson Nickol founded the USA Made clothing company in 2002 with a goal to make a difference. His dream was to support USA families and jobs by producing high-quality clothing in the USA at an affordable price. He founded the company with the help of his son BJ and wife Mary Ann Nickol. Together, the Nickol family started their company in the USA to provide jobs and a tax base that ultimately supports communities across the United States.

The All American Clothing Co. has overcome many obstacles to chase the American Dream. The All American Clothing Co. has survived a clothing industry that has lost -84% of its labor force since 1995 as according to the U.S. Bureau of Labor Statistics. The trend of outsourcing has made it tough on the company to compete with companies like them. The recession has kept consumers tight to their wallets and the American economy has been weak. These factors had the odds stacked against the success of the All American Clothing Co. But, with the help of many American Made supporters the has company pushed on.

Today, the Nickol family’s dream holds true. The All American Clothing Co. continues to grow and succeed by selling quality USA made clothing at an affordable price. The company and its supporters continue to create jobs and make a difference. Visit http://www.allamericanclothing.com or follow them onFacebook to help make a difference.

We’re Certified

Made in USA Certified

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Apple Cider and Fall

November 14, 2012 by Leave a comment

Time To Cast Your Vote for the USA

Is there anything more American this fall than carving pumpkins and drinking apple cider? (Maybe voting for President…?)

What you may not know is that roughly three-quarters of all apple juice sold in the U.S. now comes from outside this country.   That’s right. More than half comes from China alone. (Source: USA Today).

For 75 years, Zeigler’s has been producing some of the freshest Apple Cider in the world.  They use 100% fresh U.S. apples, never from concentrate…and they’re certified as Products of the USA from Made in USA Certified®, the nation’s leading independent “Made in USA” certification source.

Whether it’s apple cider or orange juice, spinach or lettuce, detergent or diapers, the USA Certified seals signal strict compliance to American-made inputs, services and/or processes, and outputs.  Your customers, regardless of where they’re seeing the seal, are ensured of  voting American with their pocketbooks.

Isn’t it time to learn more about how to certify your products as Made in USA Certified® or Product of USA Certified™? 

http://www.morningnewsbeat.com/Home/Home_S.las?Date=2012-11-14&Source=Newsletter&A=40494&C=#A40494

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Made in USA Certified® Launches US Jobs Project™ Initiative

June 20, 2012 by Leave a comment

BOCA RATON, Fla.–(BUSINESS WIRE)–Made in USA Certified® has partnered with US manufacturers to rally for US jobs and US manufacturing with a tour across America in a red, white & blue, star spangled bus. The US Jobs Project™ launches in patriotic fashion this July 3rd – July 7th, Independence Day week.

The main goals of the US Jobs Project™ are: 1) Promote US manufacturing and the critical role domestic manufacturing plays in the creation of sustainable US jobs 2) The important role consumers play in the creation of jobs by supporting products Made in USA.

“This project is fueled by the idea that Americans helping Americans can truly create sustainable jobs and jumpstart our economy. We believe that together, we create jobs in the USA,” Julie Reiser, President and Co-Founder of Made in USA Certified® said.

The US Job Project™ tour will officially kick off on July 3rd & 4th in Delray Beach, Florida for the Independence Day Extravaganza. There will be product giveaways, fan photo fun and supporters can register for the “Great American Giveaway” contest, where participants can enter to win a custom designed Gibson guitar.

After the July 4th fireworks celebration the bus will head to Daytona, Florida for the NASCAR, Subway Jalapeno 250, Coke Zero 400 races and a concert by double Platinum recording band, TRAIN at the Daytona International Speedway on July 6th & 7th.

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Re-Shoring: Manufacturers Make a U-Turn

June 1, 2012 by Leave a comment

Source: Chesapeake Bay Candle
Chesapeake Bay Candle’s U.S. factory in Glen Burnie, Maryland.

By: Chris Morris, Special to CNBC.com
Published: Wednesday, 23 May 2012

Chesapeake Bay Candle never thought twice about offshoring its manufacturing when the company started 17 years ago. To make the product it wanted, each candle had to be handmade, and there was no cost effective way to do that in the United States.

Four years ago, however, the company reversed that thinking, centering its operations domestically, and betting that as the global economy changes, the move will actually save it money.

Chesapeake Bay, with a factory in Glen Burnie, Md., is hardly alone in rethinking its manufacturing plans these days. More and more American firms are bringing those operations home — and while it might be a little premature to call this “re-shoring” effort a movement, it’s certainly starting to become a trend.

President Barack Obama, in his State of the Union speech, noted that American manufacturers created new jobs in 2011 for the first time since the late 1990s. In a recent survey by MFG.com, an online marketplace that helps businesses find manufacturers for their products, 40 percent of the manufacturing firms it polled said they had benefited from work that had previously been sourced to a supplier in another country.

“[Consumer's] desire to customize products is become more and more ravenous,” saysMitch Free, founder of MFG.com. “In order to stay relevant, [companies] have to be able to adapt very quickly. The way you do that is being somewhat close to your market. Instead of producing a big lot overseas and shipping it [here], companies can now rapidly assemble supply chains wherever they’re selling the product. They save on logistics costs. They take advantage of the local currency. And they generate good will in the market.”

MFG isn’t the only study that has pointed to an increase in re-shoring. A survey by the Boston Consulting Group in February found more than one-third of U.S.-based manufacturing executives at companies with sales greater than $1 billion are either planning or considering bringing production back to the United States from China.

Key Points

  • Wages in China are climbing at 15 to 20 percent a year, according to Boston Consulting Group
  • Speed to market is becoming more critical, as companies keep lower inventories.

“Companies are realizing that the economics of manufacturing are swinging in favor of the U.S., for goods to be sold both at home and to major export markets,” said Harold L. Sirkin, senior partner at the company. “This trend is likely to accelerate starting around 2015.”

For Chesapeake Bay, it was less a matter of customization as it was cost control.

The candle company originally based its manufacturing in China, but as anti-dumping laws (designed to prevent predatory pricing) began to impact duty rates, Chesapeake Bay took its operations to Mexico.

Unhappy with the manufacturing ecosystem there, it tried a few other countries, eventually landing in Vietnam in 2000 — a popular manufacturing hub for companies.

“The Vietnamese population is very young and it’s pretty abundant,” says Mei Xu, Chesapeake Bay’s co-founder and CEO. “The work ethics are very similar to those of the Chinese. They all want to work hard to provide a better life for their children.”

Labor costs, however, are on the rise in countries like China and Vietnam. BCG says wages in China are currently climbing at 15 to 20 percent per year, due to the demand for skilled labor. The group expects net labor costs for China and the U.S. to converge in the next three years.

Xu notes that Vietnam closely follows China’s lead on issues like salary and benefits. Today, the average salary for a manufacturing employee in the country is between $300 and $400 per month.

That’s still well below the $12.50 to $13 per hour employees in the United States can earn, but salaries only make up 20 to 30 percent of a product’s total cost according to BCG.

Other factors, meanwhile, such as shipping are seeing prices increase as well, due to rising oil prices. Xu says Chesapeake Bay noticed some shipping companies cutting back their overseas routes as well, which threatened the company’s turnaround time.

That speed to market is more critical today than ever as companies keep lower inventories on hand as a precautionary measure.

“When the economy was strong and the sales of product companies were strong, they were placing big orders offshore,” says Free. “They’d order a billion widgets and they’d get them shipped here. When the recession hit, they were stuck with that inventory, and that hit their profit margins pretty quickly. They knew it would cost more [to place smaller orders domestically], but it was a less risky capital outlay. And if consumer demand turned, they wouldn’t be stuck holding a lot of inventory they would have to eat.”

Meanwhile, advances in technology domestically have made it easier to be competitive with overseas companies.

“We have some new machinery and new methods that can be more competitive with China,” says Bruce Brandel, president of The Packaging Team, which supplies blister packaging for consumer product goods. “We’re starting to see people who moved to Mexico or China say ‘If you look at the total picture and cost, it’s not much of an advantage — and maybe a disadvantage — to be there’.”

For The Packaging Team, the degree of that competitiveness varies by product and order size, but the savings comes from new equipment Brandel says increases the speed of sealing packages ten-fold.

“If you’re spending $2 an hour there, you should be able to spend $20 an hour here with the machinery making up the difference,” he says. “Also, there are what I call soft costs [that go with offshoring]. Things like lost opportunities, being unable to meet timelines or dealing with late deliveries. What does that cost you?”

There are risks to re-shoring, too. Xu says Chesapeake (which has since transitioned to machine-filled candles) spent $5 million to secure a large factory in Maryland when it moved manufacturing here. That plant spans 125,000 square feet and can produce up to 2,000 candles per hour. But right now, it’s not being used to capacity.

The ability to ship product in two weeks versus six or seven is certainly beneficial, but there are overhead concerns. Xu notes that she remains optimistic, though. The number of people required on the manufacturing line is significantly lower in the U.S., which helps lower costs, she says.

Right now, the cost to make a candle in the U.S. is approximately the same as it is to make one in Vietnam, but Chesapeake says its betting it will see notable savings in the future, given the rising salary trends and fuel prices.

Despite what many people might think, capitalizing on the “Made in USA” movement is less of an incentive for many companies.

“In my opinion, there’s only one thing that runs corporations today, and it ain’t pride, it’s all dollars,” says Brandel. “[Made in America pride] is a good concept, but if the dollars don’t make sense, it isn’t going to happen. And maybe that’s the way capitalism is supposed to work.”

Even U.S. consumers don’t seem to be as passionate about it as many claim — though, ironically, there’s a notable demand for U.S.-made products in overseas markets — including China.

“If my Chinese consumers are asking for ‘Made in USA’ product, wouldn’t my U.S. customers do the same and pay a bit more?” says Xu. “Our [U.S.] customers, our buyers, are saying they value [an item that is] made in the U.S.A. if it’s the same price. … If it’s more expensive [at retail], there’s a pain threshold and we don’t know what it is — how much more they’ll pay.”

© 2012 CNBC.com
Email us at:  info@usa-c.com and follow us on twitter @usacertified @madeinusacert

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