Reasons mount for manufacturers to re-think the “total” vs perceieved cost of off-shoring operations

Jul 01, 2010 | 09:52 AM | Frank Haflich

U.S. manufacturing—or at least a portion of it—appears to be on course for a U-turn as work previously pushed offshore might be coming home. Statistics on the reshoring of U.S. manufacturing are hard to come by, but mill suppliers see an interest.

"I can't put a number on it, but there is a fair amount of chatter on this subject among our customer base," said Dennis Oates, president and chief executive officer of tool steel producer Universal Stainless & Alloy Products Inc., Bridgeville, Pa.

Oates said it was difficult to say just how much reshoring might have contributed to Universal's first-quarter financial improvement, but he agreed that the more tooling business that returns to the United States, the better are the chances that end-product itself will return.

Based on his discussions with customers, Oates believes there are three reasons why some shops are looking to bring work back. He said the short lead times and reliable deliveries that domestic mills like Universal have worked to achieve are helping domestic customers post the fast inventory turnarounds needed to operate efficiently in a competitive global market. And the strong dollar of years past that encouraged going overseas is no longer a compelling reason to source offshore. Finally, several companies that took manufacturing offshore in the 1980s and 1990s have since come to the conclusion that it isn't the way to go once a product's "total cost" is computed.....