This month, we cut through all the industry “buzz” and went straight to the source(s) themselves to address the current shift in manufacturing—from all angles. In our first-ever edition devoted exclusively to manufacturing, we provide you with:
- Direct insights from one supplier on why they brought part of their production back to the U.S.
- What impact on IT outside of cost structures you must consider before you start to manufacture domestically, such as intellectual property security
- The conversation from the show floor, with our exclusive reports from the Council of Supply Chain Management Professionals’ (CSCMP) Chicago Roundtable; and Infocast’s Reshoring Summit
- One firm’s take on why it works for them to continue to outsource to China
- All the consideration factors key to decide: ‘Is it time for me to bring production back home or continue to outsource it overseas?’
The vote is unanimous this month that 1). Domestic production brings opportunity and 2). Manufacturers must weigh all the factors to decide which practice—reshoring versus offshoring overseas—is right for their business. But there is an integral component to the discussion that plays a key part to one’s final production decision: site selection. Yes, we all know the rule of “location, location, location.” But its scope becomes more complex as more manufacturers today weigh the value of regionalization to better serve the customers within a specific global segment.
“The location is more than just the footprint,” explained Jake Barr, Global Director, Supply Network Operations for Procter & Gamble and Chief Executive Officer and Principal for BlueWorld Supply Chain Consulting LLC, at the CSCMP Chicago Roundtable in mid-March. “You better understand the strategy of what the facility is going to support. ‘What are you in the business to do? For what length of time? For what technology?” he questioned.
Down by the border
“As companies deal more internationally with global suppliers in developing countries—not just the USA—they are being confronted with a lot of new issues that need to be addressed,” explained Dick Gould, ASQ Fellow and supplier management trainer and consultant. “And they need to make those part of their selection process that they use for selecting the suppliers they want to work with.”
One such company that made significant progress in reshoring portions of its supply chain to the U.S. is Mitsubishi Caterpillar Forklift America (MCFA). The forklift manufacturer—under the Cat lift trucks, Mitsubishi forklift trucks and Jungheinrich brands—broke ground this past February in Houston to expand its headquarters manufacturing facilities.
“This factory expansion allows us to reshore production,” said Jay Gusler, Vice President of Operations for MCFA. “We have been really working hard for the past three years to increase the local content in our products, increase U.S. sourcing to shorten our supply chain and bring it closer to Houston, reduce currency risk, reduce transportation spend and increase the stability and visibility into our supply chain.”
With the additional manufacturing space, the growth will support future production of the Jungheinrich ECR 327/336 series of electric end rider pallet trucks. The multi-million-dollar expansion will increase the under-roof production capacity at MCFA’s world-class facility by more than 40 percent.
“We want to support the U.S. economy by sourcing components here, creating more jobs here and producing more here,” Gusler confirmed. “That is our focus.”
The reason behind the manufacturer’s facility expansion decision was two-fold, he explained. The first reason was to create a dedicated electric products production facility, focused on the new Jungheinrich design models that we will built at the Houston site as opposed to buying them from Jungheinrich and having them shipped from Germany. The second reason was to have MCFA become the global source for its forklift business for the production of its seven-ton model and its 10-to-18-ton model, which will be transferred from Japan to the Houston facility at the end of 2013.