Manufacturers Urged to Return Operations to Pa
A number of factors are creating an environment many area manufacturers probably thought they’d never see again: a reason to believe “Made in America” can be more than a nostalgic slogan.
Some of the manufacturers gathered Tuesday at the Chester County Economic Development Council’s headquarters to hear from colleagues and supporters on reasons to consider returning overseas manufacturing operations to the region.
“It’s the world of the fast and the dead, and nobody wants to be dead,” said Don Rongione, president and CEO of Bollman Hat Co., which is in the process of relocating 80 special knitting machines used to make its Kangol line of hats from China to its plant in Adamstown, Lancaster County.
The company has invested $350,000 in the $650,000 project and has gone so far as to start a Kickstarter campaign to raise money to make it happen. The move will create 41 jobs in the state, Rongione said.
Some manufacturers in the area believe their industry is due for a rebirth in America.
“The fashion business moves very quickly, so shortening the process is very important to us,” he explained at the re-shoring workshop seminar put on by the Manufacturing Alliance of Chester & Delaware Counties.
Also presenting at the session were Tom Walser, president of CNC Manufacturing in the Coatesville area and Ralf Weiser, technical manager of Aerzen USA Corp., also located in the Coatesville area.
According to the alliance, which recently received a $272,000 grant to assist companies in considering a move of factory work back to southeast Pennsylvania, more than 20 percent of manufacturers are already engaged in creating local supply chains and re-shoring across the U.S.
Among the reasons some companies are moving operations back:
• Inferior product quality and inspections overseas;
• Growing transportation and fuel costs;
• Increasing wages in other countries;
• Exchange rate fluctuations;
• The inability to provide needed responsiveness to issues;
• Longer delivery cycle times.
If companies agree it no longer makes sense ship their manufacturing overseas, it will breathe life into an industry that has been decimated in the region over the past 25 years.
According to a regional report released in 2013, some 57,700 manufacturing jobs were lost in 10 Philadelphia area suburban counties, followed by a larger decline of 96,700 between 2000 and 2013.
Much of the manufacturing base that was in the area will never come back – labor costs can’t be overcome in the work that is high volume and low skilled.
But for manufacturing that requires more technical knowledge, the wage advantage in traditionally low-cost regions is narrowing.
“Labor rates were doubling every five years in southern China,” Rongione noted of his company’s experience.
Being close at hand, meanwhile, lets CNC offer customers flexibility, high quality and reliable machining services, Walser said.
CNC recently purchased a company that makes dental supplies and doubled its sales in nine months.
“It gives us the flexibility to do tests right here,” instead of the lag time in dealing with plants in other parts of the world, Walser said.
Nancy E. Kunkle, project consultant of RAMP It Up: Regional Alliance for Reshoring Manufacturing and the Chester County Economic Development Council, said the $272,000 grant enables the partners to help manufacturers make their re-shoring decisions in six counties: Berks, Bucks, Chester, Delaware, Montgomery and Philadelphia.
At no charge, they will:
• Financially examine the business case for re-shoring;
• Compare operating costs between re-shoring and offshoring;
• Identify the hidden costs of offshoring;
• Incorporate potential transition costs into a cash flow model.
For more information, contact Nancy Kunkle @ firstname.lastname@example.org or Alan Slobojan at email@example.com.
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