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Guest Webinar Presentation: To Offshore or Reshore:     Harry Moser, President of the How to Objectively Decide   Reshorin...
Agenda and Introduction Agenda and Introduction To Offshore or Reshore: How to Decide Harry Moser, President & Founder of ...
Relevance of TCO and reshoring to quality and compliance  Compliance and quality are, on average, superior:     Generall...
Definitions  Reshoring/Backshoring/Onshoring: Bringing back manufacture of   products that will be sold or assembled here...
Geographic sourcing alternatives                               IBS Overview   THE PRODUCTIVITY ADVANTAGE
The concept also works in other countries                                IBS Overview   THE PRODUCTIVITY ADVANTAGE
“Manufacturing Is Expected to Return to America”“Renaissance in Manufacturing”  “We expect net labor costs for   manufact...
U.S. Manufacturing Competitiveness for Exports – Exhibit 4                                                                ...
U.S. Manufacturing Competitiveness in Domestic Markets –                          Exhibit 5U.S. Mfg. Cost Advantage over C...
Offshoring: partially herd behavior A „herd‟ mentality to participate in the „Chinese miracle‟ developed among global gia...
Flawed company economic model   60% of manufacturers:    Apply “rudimentary” total cost models    Ignore 20% or more of ...
The Industry-Led Initiative Provides Free Total Cost of Ownership (TCO) Software for companies and  suppliers/unions Onl...
Some major global supply chain problems   Fragility:        Natural disasters: Japan, Thailand, European volcano       ...
One reason price has dominated sourcing decisions: complexity    Decision                       Alternative Sources’ Cost ...
TCO Estimator benefits Provides a single TCO for each  source Flexible: values are 100% user  selected. Broad:    29 c...
Example: some Assumptions: a Part  Chinese unit price     $70      Product liability risk*              0.5%  U.S. unit pr...
TCO Comparison Example:a Moderate Labor Content Part                              PRESENT AND FORECAST U.S AND CHINA PRICE...
Cumulative Cost by Category                                               CUM ULATIVE COST BY CATEGORY, YEAR 0: PARTS     ...
Statistics from TCO data base:10 cases China vs. U.S.   At price level, U.S. averages 108% high.   At TCO level, U.S. av...
Master Lock Combination locks     Milwaukee     Productivity 6X as high as China     Can manufacture here for less    ...
Water-heaters Bringing Production back from China:  Water-heater production  Unionized facility in Louisville, KY  400 ...
Freeman Schwabe Machinery:hydraulic die cutting presses From Taiwan to Cincinnati, OH Ability to Control Own Destiny Wa...
OH and MI Hybrid transmission component from Japan Battery pack assembly from Mexico Steel forging from India Reason: ...
Example 50% of Frisbees China back to CA and MI                            IBS Overview   THE PRODUCTIVITY ADVANTAGE
Deming on Total Cost                         “End the practice of                         awarding business on            ...
Potential benefits For the U.S.:    Eliminate trade deficit ~ $600B/year    3M manufacturing jobs    8M total jobs ► 4...
Gaining support in DC   Council on Competitiveness:      Working on Reshoring   AFL-CIO:      National Reshoring webin...
1/11/12 Insourcing Forum                           IBS Overview   THE PRODUCTIVITY ADVANTAGE
1/11/12 Insourcing Panel                           IBS Overview   THE PRODUCTIVITY ADVANTAGE
Selling using TCO Focus on profit impact, risk management, strategic benefits Overcome mandates Many Supply Chain Manag...
Ways to participate Use the tools. Free at www.reshorenow.org Post a link to www.reshorenow.org Call on me to speak at:...
A non-profit with 27 sponsors, includingPlatinum Gold Silver                           IBS Overview    THE PRODUCTIVITY AD...
A non-profit with 27 sponsors Bronze  Steel   Iron                      IBS Overview   THE PRODUCTIVITY ADVANTAGE
Obtain information, improve profitability and help slow theoffshoring flood now!Contact:Harry MoserInitiative Founder847-7...
Agenda and Introduction Agenda and Introduction To Offshore or Reshore: How to Decide Harry Moser, President & Founder of ...
Agility, Communication and Control                        • The ability to accommodate change                        • The...
Thank You! Questions?            IBS America, Inc.             www.ibs-us.com              (781) 862-9002           PRESEN...
To Offshore or Reshore? How to Objectively Decide
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To Offshore or Reshore? How to Objectively Decide

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Companies are starting to compare the real P&L impacts of offshoring and reshoring in view of recent supply chain disruptions and Boston Consulting Group’s forecast of convergence of Chinese and U.S. net manufacturing costs by 2015. The non-profit Reshoring Initiative provides free software you can use to help companies make the comparison.

In pursuit of “lowest price,” many companies offshored more than was in their own self-interest. Boston Consulting Group’s forecast of convergence of Chinese and U.S. net manufacturing costs by 2015 suggests that the amount of work that is reshored will rise rapidly over the next few years.

To help companies make better sourcing decisions and decide to expand or locate factories in the U.S., the Reshoring Initiative provides a deep understanding of the economic trends and free objective software that helps companies calculate the real current and forecast offshoring impact on their P&L. The simple software helps the user quantify the trade-off of lower price/labor costs vs. the benefits of sourcing closer to the customer. It applies to 18 countries, and is applicable to any of the countries - not just the U.S. - as the destination country.

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  • DOWNLOAD FULL BOOKS, INTO AVAILABLE FORMAT ......................................................................................................................... ......................................................................................................................... ,DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. PDF EBOOK here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. EPUB Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ,DOWNLOAD FULL. doc Ebook here { https://tinyurl.com/yyxo9sk7 } ......................................................................................................................... ......................................................................................................................... ......................................................................................................................... .............. Browse by Genre Available eBooks ......................................................................................................................... Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult,
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To Offshore or Reshore? How to Objectively Decide

  1. 1. Guest Webinar Presentation: To Offshore or Reshore: Harry Moser, President of the How to Objectively Decide Reshoring Initiative www.reshorenow.orgIBS AmericaTHE PRODUCTIVITY ADVANTAGE
  2. 2. Agenda and Introduction Agenda and Introduction To Offshore or Reshore: How to Decide Harry Moser, President & Founder of the Reshoring Initiative - 35 minutes Change Management and Corporate Agility Mary McAtee, IBS VP of Training & Implementation – 10 minutes Q&A – 5 minutes IBS Overview THE PRODUCTIVITY ADVANTAGE
  3. 3. Relevance of TCO and reshoring to quality and compliance  Compliance and quality are, on average, superior:  Generally, local to the home plant  Specifically, in the U.S. vs. LLCCs  Using TCO shows which work can be reshored to improve quality and compliance and increase profits IBS Overview THE PRODUCTIVITY ADVANTAGE
  4. 4. Definitions  Reshoring/Backshoring/Onshoring: Bringing back manufacture of products that will be sold or assembled here  Outsourcing: Work done by another company, wherever located  In-house: work done in the company‟s facilities, wherever located IBS Overview THE PRODUCTIVITY ADVANTAGE
  5. 5. Geographic sourcing alternatives IBS Overview THE PRODUCTIVITY ADVANTAGE
  6. 6. The concept also works in other countries IBS Overview THE PRODUCTIVITY ADVANTAGE
  7. 7. “Manufacturing Is Expected to Return to America”“Renaissance in Manufacturing”  “We expect net labor costs for manufacturing in China and the U.S. to converge by around 2015”  “take a hard look at the total costs” Source: Boston Consulting Group press release 5/5/11 IBS Overview THE PRODUCTIVITY ADVANTAGE
  8. 8. U.S. Manufacturing Competitiveness for Exports – Exhibit 4 290%U.S. Mfg. Cost Advantage over China for Products Consumed in the 0% -5% Circle size = U.S. -10% consumption Global Leaders Food -15% Auto Final Assm. Electrical Eqpmt -20% Primary Metal Computer Eqpmt Appliances -25% Auto Veh. Parts Furniture Textile Mills Paper Chemicals -30% Textile Product Mills Machinery -35% Printing Petro/Coal Aerospace -40% Electronics Leather Semiconductors Apparel Plastics Pharma. -45% Wood Product Fabricated Metal Medical Eqpmt. -50% Other Transp. Eqpmt. Bev. & Tobacco -55% -60% -65% Nonmetallic Mineral ProductChina(1) -70% U.S. Manufacturing Positional Advantage for Export High 1) The U.S. cost advantage represents the labor and logistics costs compared with those of Chinese manufacturers, for products consumed by people in China. Source: U.S. Census Bureau, Bureau of Labor Statistics, UBS Research, CapitalIQ, Energy Information Administration, World Bank, Eurostat, World Trade Organization, IRS Statistics, Tauber Institute for Global Operations, Booz & Company IBS Overview THE PRODUCTIVITY ADVANTAGE
  9. 9. U.S. Manufacturing Competitiveness in Domestic Markets – Exhibit 5U.S. Mfg. Cost Advantage over China for Products Consumed in the US(1) 300% Circle size = U.S. 200% Nonmetallic Mineral Product consumption Global Leaders Petro/Coal 90% Regional Powers 80% 70% Sectors on the Edge Wood Product 60% Food Niche Players 50% 40% Fabricated Metal Bev. & Tobacco 30% Textile Product Mills Paper Primary Metal 20% Chemicals Apparel 10% Textile Mills Plastics Other Transp. Eqpmt. 0% * -10% Auto Final Assm. Machinery -20% Aerospace Furniture Printing Pharma. Electronics -30% Leather Medical Eqpmt. Electrical Eqpmt. Semiconductors -40% Appliances Computer Eqpmt. -50% -60% -70% U.S. Manufacturing Positional Advantage for U.S. Low High Demand 1) The U.S. cost advantage represents the labor and logistics costs compared with those of Chinese manufacturers, for products consumed by people in the United States. Source: U.S. Census Bureau, Bureau of Labor Statistics, UBS Research, CapitalIQ, Energy Information Administration, World Bank, Eurostat, World Trade Organization, IRS Statistics, Tauber Institute for Global Operations, Booz & Company IBS Overview THE PRODUCTIVITY ADVANTAGE
  10. 10. Offshoring: partially herd behavior A „herd‟ mentality to participate in the „Chinese miracle‟ developed among global giant corporations - Peter Nolan; University of Cambridge, 9/03 “There is a herd mentality with OEMs in China —sometimes it makes sense, sometimes it doesn‟t—not always rational decision…People tell their bosses what they want to hear—(going to China) gives aboost to the stock valuation, but you really have to do the analysis on acase by case basis.” - Technology Forecasters, 10/03Source: Stone & Associates IBS Overview THE PRODUCTIVITY ADVANTAGE
  11. 11. Flawed company economic model 60% of manufacturers:  Apply “rudimentary” total cost models  Ignore 20% or more of the total cost of offshored products Source: Archstone Consulting survey, American Machinist Mag., 7/16/09 IBS Overview THE PRODUCTIVITY ADVANTAGE
  12. 12. The Industry-Led Initiative Provides Free Total Cost of Ownership (TCO) Software for companies and suppliers/unions Online Library of 98 reshoring articles Media coverage of the trend: WSJ, USATODAY, IW, CBS, CNBC, etc. ~100 presentations/yr nationwide A solution to today’s supply chain problems IBS Overview THE PRODUCTIVITY ADVANTAGE
  13. 13. Some major global supply chain problems  Fragility:  Natural disasters: Japan, Thailand, European volcano  Political instability  Chinese and other LLCC:  Wages rising rapidly  Currencies poised to rise faster  U.S. $ declining  Oil soaring IBS Overview THE PRODUCTIVITY ADVANTAGE
  14. 14. One reason price has dominated sourcing decisions: complexity Decision Alternative Sources’ Cost Criteria Offshore Local Price Low High Total risk High Low Balance sheet High Low Customer non- High Low responsiveness Lack of innovation High Low Typical decision ? ? IBS Overview THE PRODUCTIVITY ADVANTAGE
  15. 15. TCO Estimator benefits Provides a single TCO for each source Flexible: values are 100% user selected. Broad:  29 cost factors.  Via pull down menus you automatically insert:  Freight rates for 17 countries  Duty rates for parts or tools, e.g. molds  Current value and 5 year forecast of TCO. Easy to use:  Explanations and references to help select values.  Instruction Manual. Free IBS Overview THE PRODUCTIVITY ADVANTAGE
  16. 16. Example: some Assumptions: a Part Chinese unit price $70 Product liability risk* 0.5% U.S. unit price $100 IP risk* 1.9% # units/year 12,000 Innovation* 0.5% unit weight, lbs 2 Trips/yr 2 Shipments/year 6 product life, yrs 5 Carrying cost, rate 22% Packaging* 1% Emergency air freight %* 5% Payment on shipment Yes Wage inflation, annual* 8% Currency appreciation, Quality* 2% annual* 5% * Chinese differential vs. U.S. IBS Overview THE PRODUCTIVITY ADVANTAGE
  17. 17. TCO Comparison Example:a Moderate Labor Content Part PRESENT AND FORECAST U.S AND CHINA PRICE AND TCO: PARTS $130.00 $120.00 COST, U.S. $ $110.00 U.S. TCO $100.00 China TCO $90.00 U.S. Price $80.00 $70.00 China Price $60.00 $50.00 1 2 3 4 5 6 Year IBS Overview THE PRODUCTIVITY ADVANTAGE
  18. 18. Cumulative Cost by Category CUM ULATIVE COST BY CATEGORY, YEAR 0: PARTS $110 CUMULATIVE COST, U.S. $ $100 $90 U.S. $80 China $70 $60 ic e S rd sk ic en Pr Co G Ha Ri teg re er ra G th St O COST CATEGORY IBS Overview THE PRODUCTIVITY ADVANTAGE
  19. 19. Statistics from TCO data base:10 cases China vs. U.S.  At price level, U.S. averages 108% high.  At TCO level, U.S. averages 12% high  For 60% of the cases: U.S. TCO is lower than Chinese TCO, averaging 22% lower IBS Overview THE PRODUCTIVITY ADVANTAGE
  20. 20. Master Lock Combination locks  Milwaukee  Productivity 6X as high as China  Can manufacture here for less  78 jobs reshoredSource: MSNBC.com 6/29/11 Scott Malone IBS Overview THE PRODUCTIVITY ADVANTAGE
  21. 21. Water-heaters Bringing Production back from China:  Water-heater production  Unionized facility in Louisville, KY  400 jobs, renovated facility  Reasons:  Tax incentives  High-tech new model  Ease of design collaboration with workers: cut cost $20  2 tier contract  Chinese cost: -30% becomes +6% considering inventory and delivery problems  Will move a “significant piece” of appliance production back IBS Overview THE PRODUCTIVITY ADVANTAGE
  22. 22. Freeman Schwabe Machinery:hydraulic die cutting presses From Taiwan to Cincinnati, OH Ability to Control Own Destiny Warranty Reduced by 90% on Custom Presses Improved Speed to Market – at Least 30 days Thus Far Created 17 Jobs Builds Employee Skills & Morale Restoring Long-Term “Made in USA” Heritage for Schwabe Presses IBS Overview THE PRODUCTIVITY ADVANTAGE
  23. 23. OH and MI Hybrid transmission component from Japan Battery pack assembly from Mexico Steel forging from India Reason: be sure quality standards are followed Source: Deseret News 8/4/10 Ford says UAW deals bring work back to its plants IBS Overview THE PRODUCTIVITY ADVANTAGE
  24. 24. Example 50% of Frisbees China back to CA and MI IBS Overview THE PRODUCTIVITY ADVANTAGE
  25. 25. Deming on Total Cost “End the practice of awarding business on the basis of price tag. Instead, minimize total cost.” Source: “4th Key Principle for Management,” Out of the Crisis, W. Edwards Deming IBS Overview THE PRODUCTIVITY ADVANTAGE
  26. 26. Potential benefits For the U.S.:  Eliminate trade deficit ~ $600B/year  3M manufacturing jobs  8M total jobs ► 4% unemployment  Budget deficit impacts: more than is likely from debt limit plan For U.S. companies:  Stronger home market  Reduced chance of protectionism hurting world sales  Increased sales as “Made in USA” IBS Overview THE PRODUCTIVITY ADVANTAGE
  27. 27. Gaining support in DC  Council on Competitiveness:  Working on Reshoring  AFL-CIO:  National Reshoring webinar  Commerce Dept:  2012 budget specifies developing TCO  NIST MEP: 9 presentations in 2011  Calls from:  United States-China Economic and Security Review Commission  White House National Economic Council  SelectUSA IBS Overview THE PRODUCTIVITY ADVANTAGE
  28. 28. 1/11/12 Insourcing Forum IBS Overview THE PRODUCTIVITY ADVANTAGE
  29. 29. 1/11/12 Insourcing Panel IBS Overview THE PRODUCTIVITY ADVANTAGE
  30. 30. Selling using TCO Focus on profit impact, risk management, strategic benefits Overcome mandates Many Supply Chain Managers believe Work with natural allies:  Lean, Green, compliance, quality, line management Maximize the advantages of proximity Match “Chinese” price or TCO? IBS Overview THE PRODUCTIVITY ADVANTAGE
  31. 31. Ways to participate Use the tools. Free at www.reshorenow.org Post a link to www.reshorenow.org Call on me to speak at: open houses, webinars, sales and supply chain training sessions Promote to customers and prospects Submit cases of reshoring for publication Use our standard template email to involve customers Sponsor IBS Overview THE PRODUCTIVITY ADVANTAGE
  32. 32. A non-profit with 27 sponsors, includingPlatinum Gold Silver IBS Overview THE PRODUCTIVITY ADVANTAGE
  33. 33. A non-profit with 27 sponsors Bronze Steel Iron IBS Overview THE PRODUCTIVITY ADVANTAGE
  34. 34. Obtain information, improve profitability and help slow theoffshoring flood now!Contact:Harry MoserInitiative Founder847-726-2975harry.moser@comcast.netwww.reshorenow.org Competing with/avoiding low labor cost competitors: http://us.gfac.com/company/careers/swot.cfm Recruiting trainees for the skilled manufacturing workforce: http://tinyurl.com/33vpz9k IBS Overview THE PRODUCTIVITY ADVANTAGE
  35. 35. Agenda and Introduction Agenda and Introduction To Offshore or Reshore: How to Decide Harry Moser, President & Founder of the Reshoring Initiative - 35 minutes Change Management and Corporate Agility Mary McAtee, IBS VP of Training & Implementation – 10 minutes Q&A – 5 minutes IBS Overview THE PRODUCTIVITY ADVANTAGE
  36. 36. Agility, Communication and Control • The ability to accommodate change • The ability to leverage assets and resources Agility • Consistent requirements, workmanship standards • Change management Communication • Reporting and business intelligence • Location and status of activities and material Control • Control of access for intellectual property© IBS, 2006 Page 37 IBS Overview THE PRODUCTIVITY ADVANTAGE
  37. 37. Thank You! Questions? IBS America, Inc. www.ibs-us.com (781) 862-9002 PRESENTER: Harry Moser E: harry.moser@comcast.net P: 847-726-2975 www.reshorenow.org Quality Management 2.0 http://info.ibs-us.com @IBSAmerica IBS Overview THE PRODUCTIVITY ADVANTAGE

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