April 19, 2017 Leave a comment
Snap-on CEO: Manufacturing has a PR Problem
February 11, 2016 Leave a comment
A handful of companies recently faced lawsuits over supposed false “Made in USA” claims. Consumers are suing companies for claiming their products are American-made, when in reality they may not be or too many parts of the product are produced in foreign countries. Companies facing these lawsuits include food company Heinz, energy drink maker Rockstar and a number makers of jeans: True Religion, AG Adriano Goldschmied and Citizens of Humanity.Americans apparently really want their denim to be domestic.
October 1, 2013 Leave a comment
By: Austin Wright – reposted from Politico
September 30, 2013 05:06 AM EDT
Domestic shoemakers are going toe to toe with the Pentagon over its footwear policies.
New Balance is leading a charge to force the military to buy U.S.-made running shoes for recruits, meeting with members of Congress and the Obama administration to press its case.
The company sees a $50 million opportunity in a population for which running is mandatory — and a cause that might be difficult for any flag-waving politician to oppose.
The military sees a regulatory headache.
The issue is significant for the Pentagon, which today allows the services to decide for themselves how best to buy running shoes. But a provision making its way through Congress could lead to a militarywide shoe policy — and another example of the transfer of power from the services to the Office of the Secretary of Defense, which has expanded in recent years despite pledges to downsize by leaders past and present.
“We tend to grow by congressional fiat,” said one Pentagon official, requesting not to be identified to offer a candid take.
The standoff with shoemakers is also significant for the Defense Department because of the industry’s aggressive public relations push. Defense officials are accustomed to dealing with often deferential contractors, which depend on the Pentagon for a substantial portion of their sales and rarely disagree with the brass in public.
With New Balance, however, the shoe is on the other foot.
“We have not been quiet about our desire to see the department follow its own rules,” said company spokesman Matt LeBretton, referring to a 1941 statute called the Berry Amendment that requires the Pentagon to buy food, clothing and other items from producers inside the United States.
“Soldiers don’t have a choice for most of the gear that they’re given, so I don’t know why it would be different for athletic footwear,” LeBretton said. “The administration talks a lot about supporting domestic manufacturing — here’s an opportunity to do it.”
Each of the services has a different policy for equipping recruits with running shoes as they enter boot camp. The Army, for example, provides soldiers a one-time cash allowance to buy shoes from military exchanges, which stock a number of brands.
Men are given $75 for shoes and white socks, and women are given $347 for shoes, socks, black dress pumps, stockings, underwear and a black purse. The brass says it’s easier to handle this kind of purchase this way.
“For the Army to maintain those items in inventory, it would have to be quite a large inventory,” said Army spokesman Wayne Hall.
The Air Force, meanwhile, gives recruits $75 to purchase athletic shoes, also at military exchanges, following foot exams to determine the right brand and fit. The service spends about $2.3 million on the program each year, according to Air Force spokeswoman Lt. Col. Laurel Tingley.
Domestic shoemakers — and their allies on Capitol Hill — consider these policies a violation of the Berry Amendment because recruits are allowed to pick brands such as Nike, which produces most of its shoes outside the U.S.
Their message: Follow the lead of the Navy, which provides recruits only one brand option: New Balance.
The company was selected in part because its shoes “are assembled in the U.S.,” said Kristine Sturkie, a spokeswoman for the Navy Exchange Service Command. The service spent about $3 million last fiscal year to equip about 41,490 recruits with New Balance running shoes, she said.
A provision in the House version of this year’s defense authorization bill would force all the services to adopt a policy similar to the Navy’s — requiring military recruits to be equipped with U.S.-made shoes as they enter boot camp. The bill is expected to be taken up by the Senate before the end of the year.
The measure, championed by Democratic Reps. Niki Tsongas of Massachusetts and Michael Michaud of Maine, would take effect only once the Pentagon certifies there are two suppliers capable of producing shoes compliant with the requirements of the Berry Amendment.
“Innovative companies, such as New Balance right here in Massachusetts, are able to provide our service members with quality products and keep business here on American soil,” Tsongas said in a statement. “It is time for the Department of Defense to treat athletic footwear like every other uniform item, including boots, and buy them from American manufacturers.”
LeBretton said New Balance doesn’t produce Berry-compliant shoes today; it uses some foreign-made materials. But he said New Balance and at least one other company could produce shoes made from start to finish in the United States — if there was a military-scale demand for them.
“The ‘Field of Dreams’ analogy applies,” he said. “If you build it, they will come.”
And Steve Lamar, executive vice president of the American Apparel & Footwear Association, said his group has been lobbying hard to get the Tsongas provision included in the final version of this year’s defense authorization bill.
“We’ve been talking to folks in both the House and the Senate to urge them to include this in the final package,” Lamar said. “It’s important, and obviously for the firms involved it’s a huge economic impact.”
To learn more about Made in USA Certification: www.USA-C.com
August 28, 2012 Leave a comment
U.S. Sen. Bob Casey was in Erie on Monday to stump for stronger guarantees that materials used in highway and bridge construction are American-made.
Loopholes in buy-American requirements have allowed the use of foreign-made steel, iron and other materials in major U.S. construction projects, Casey said.
The Invest in American Jobs Act, co-sponsored by Casey in December, would eliminate loopholes and extend buy-American requirements to other infrastructure and transportation projects, Casey said. The legislation also would require public disclosure and comment on any proposed waivers.
“Since the 1930s we’ve had legislation that creates a standard of preference for steel, iron and other manufactured products made in America. This legislation would extend and further develop that made-in-America preference,” Casey said.
Casey outlined the proposed legislation at the Bicentennial Tower on lower State Street. The nearby Dobbins Landing Bridge is being rebuilt over the Canal Basin with all American-made materials, but that’s not always the case, Casey said.
Stronger requirements to use American-made materials will create new manufacturing jobs, Casey said. He cited a 2009 University of Massachusetts study that found that 100 percent reliance on domestic materials for infrastructure construction would increase manufacturing jobs by one-third.
About 509,000 Pennsylvanians, including some 11,000 in Erie County, are unemployed, according to the most recent jobless figures, released in June.
“This legislation is one way to get unemployment numbers down and job creation numbers up,” Casey said.
Casey’s Invest in American Jobs legislation was co-sponsored by Sens. Sherrod Brown, D-Ohio, and Debbie Stabenow, D-Mich.
Earlier Monday, Casey attended a campaign luncheon at the Maennerchor Club. The Scranton Democrat is running for a second six-year Senate term against Republican Tom Smith, of Armstrong County.
VALERIE MYERS can be reached at 878-1913 or by e-mail. Follow her on Twitter at twitter.com/ETNmyers.
June 1, 2012 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.
“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.”
February 27, 2012 1 Comment
Written by: BBC North America editor, Mark Mardell
Drew Greenblatt is an enthusiast: proud of his company, Marlin Steel, and proud of the factory floor packed with state-of-the-art equipment.
I watch, fascinated, as a little white robot squeezes out a wire, putting kinks and bends in it as it emerges.
Then it hands it over to a slightly larger yellow robot, which holds it steady for a twist in the end before turning it over for another twist at the other end.
Oddly, I find this cutting-edge equipment rather cute and cartoonish.
The question is whether this endearing duo are merely the remnants of America’s industrial past or the sort of equipment that will make the USA world-beaters once again.
The factory floor space at Marlin Steel is being doubled and there is no doubt the company is doing well, prospering even, during the bad years. Read more of this post
February 23, 2012 Leave a comment
If you happen to notice sometime later this year that you’re suddenly paying a lot more for orange juice, you can blame America’s food safety authorities. The U.S. Food and Drug Administration, after several weeks of deliberation, has blocked imports of frozen, concentrated orange juice from Brazil, probably for the next 18 months or so, even though the agency says the juice is perfectly safe.
The FDA’s explanation is that its hands are legally tied. Its tests show that practically all concentrated juice from Brazil currently contains traces of the fungicide carbendazim, first detected in December by Coca-Cola, maker of Minute Maid juices. The amounts are small — so small that the U.S. Environmental Protection Agency says no consumers should be concerned.
The problem is, carbendazim has not been used on oranges in the U.S. in recent years, and the legal permission to use it on that crop has lapsed. As a result, there’s not a legal “tolerance” for residues of this pesticide in orange products. Read more of this post
February 23, 2012 Leave a comment
By Howard Wial @CNNMoney February 23, 2012: 5:34 AM ET
Howard Wial is a fellow for the Brookings Institution Metropolitan Policy Program.
At first glance, manufacturing jobs would appear to be a dying breed.
The United States lost 6 million manufacturing jobs between early 2001 and late 2009. And despite small gains during the last two years, the trend in manufacturing employment for the last 30 years has been downward.
That has led some to argue that long-term job loss in the industry is inevitable. But our research shows otherwise.
There are two common versions of the “inevitability” argument. One holds that U.S. manufacturing wages are too high to be internationally competitive. The other maintains that manufacturing job losses are the result of productivity growth. Both arguments are wrong. Read more of this post
February 17, 2012 Leave a comment
Brian Sozzi, Contributor 2/16/2012
The grand theme I want to put on the table is the concept of onshoring, sometimes called reshoring, which is the bringing back of U.S. jobs from overseas supply chains.
U.S. businesses have started to realize that while workers in far away lands garner miniscule wages compared to their U.S. counterparts, having operations outside of the country can be a strategic disadvantage. The speed and structure in which information is consumed has caused U.S. consumers to demand top quality products and to want to buy them whenever they please.
Having a manufacturing plant domestically aids in the quicker movement of goods from design table to sales floor. Furniture maker Ethan Allen is great example of a manufacturer producing most of its products in the U.S. and doing customization for clients, setting itself apart from price-point focused competitors.
Corporate managers are simply getting over their infatuation with cheap international labor and analyzing the total costs of doing business in the U.S. compared to say, China or India.
There is a dollop of icing on the cake here as well. The topic of focusing on onshoring to boost employment levels seems to be an area of agreement between bickering Republicans and Democrats. Republican presidential hopeful Rick Santorum, for example, wants to zero out the U.S. corporate tax for manufacturers.
Anytime the major political parties agree on anything, even the slight thing, it’s cause to sit up and take notice from an investment standpoint. The Donkeys and Elephants may be a little apart on how to precisely shepherd along the corporate onshoring interest, but at least they are talking the same language. It’s high time they do find common ground if the following is to be reversed:
I have read a fair number of columns bantering about onshoring. Is it overhyped? Do we really need more jobs in the service sector U.S. economy? The debates are almost endless. Unfortunately, though, I have failed to stumble upon investment strategies to profit from onshoring, which has already begun to a certain extent, and could likely gain steam in the years ahead.
Buy-and-hold investors, this should be right in your wheelhouse: a highly probable future event to build positions around in companies with durable competitive advantages.
A few names that come to mind: