Rubber manufacturing in America: Reshoring Initiative aims to bring jobs to U.S.

KILDEER, Ill.—Are you a manufacturer of rubber products or anything else, wondering if it makes sense to bring some of your offshore production back to the U.S.?

If so, Harry Moser and the Reshoring Initiative are ready to help you decide.

Moser founded the Reshoring Initiative in the Chicago suburb of Kildeer in 2010. On the organization's website, Moser describes it as “an industry-led effort to bring manufacturing jobs back to the United States.”

The Reshoring Initiative helps U.S. manufacturers figure all the costs of moving production offshore—something, according to Moser, they don't often do.

“Our purpose is to get companies to re-evaluate offshoring,” he said. “Does it make sense or doesn't it?'

On its website, the Reshoring Initiative offers online tools to help U.S. manufacturers and suppliers calculate the total cost of ownership of both offshoring and reshoring.

Those tools include:

* The Reshoring Library, an online database that catalogs nearly 300 articles about examples of reshoring, sorted by state, country, industry and reason for reshoring;

* The Reshoring Case Studies Template, through which manufacturers, technology suppliers and distributors easily can report cases of reshoring for the library; and

* The TCO Estimator, an intuitive online calculator for determining a company's profit and loss impact under both offshoring and reshoring.

The tools are free, and no one pays to use the website or any of its features. Although Moser has acted as a paid consultant to a few corporations, the Reshoring Initiative is paid for by 38 sponsors, he said. These sponsors include trade associations, economic development organizations and manufacturers of capital equipment and cutting tools, he said.

Among the sponsors of the Reshoring Initiative, as listed on the website, are the Society of the Plastics Industry, US Bank, the Association for Manufacturing Excellence and the Association for Hose and Accessories Distribution.

These sponsors also pay for Moser's presentations—about 100 annually across the U.S., at trade shows, Chamber of Commerce meetings, manufacturing facilities and other venues.

In these speeches, Moser makes the case for reshoring, both economically and from the standpoint of public opinion.

In a 2012 presentation, Moser quoted a survey by the Alliance for American Manufacturing, showing that 78 percent of U.S. consumers viewed the “Made in America” label very favorably.

That figure was up from 58 percent two years before.

A survey the same year by Perception Research Services International showed that 76 percent of respondents were more likely to buy a product made in the U.S., while 57 percent were less likely to buy a product made in China, Moser said.

The initiative's 2013 annual activity and accomplishment summary attested to steady progress in persuading U.S. manufacturers to move jobs back home.

In 2003, U.S. manufacturers offshored some 150,000 jobs and reshored only 2,000, making a deficit of 148,000 jobs, the summary said.

In 2013, only 30,000 to 50,000 jobs were offshored compared with 30,000-40,000 reshored, creating a virtual zero-sum balance. In 2016, a surplus of 50,000 reshored U.S. jobs, projecting 20,000 jobs offshored and 70,000 reshored, is a distinct possibility, according to the initiative.

“Wages in China have gone up 15 to 18 percent in the past year,” Moser said. “By comparison, U.S. wages rose an average of 2 percent.”

Rapid wage increases in China—as well as excess inventory, long lead times, expensive transportation and energy, and lower productivity compared with the U.S.—are making the U.S. more and more attractive to manufacturers, he said.

“If you're Apple, China worked out fine for you,” he said. “But if you're not Apple, you have quality issues.”

But if Moser is enthusiastic about the future of reshoring, other sources are considerably less sanguine.

“Reshoring is still in its infancy and is more the exception than the rule,” said Stan Johnson, international secretary-treasurer of the United Steelworkers union.

“We need to implement policies that will ensure that a wave of reshoring occurs year after year,” Johnson said. “This means having a strategy, enforcing the rules, ensuring that the benefits of the energy boom we have created benefits domestic entities, and taking other vital steps. There is no silver bullet.

“In tires, we have a long way to go before we can serve domestic needs with domestic capacity. This is one of the most lucrative markets in the world, and our consumers should be served out of U.S. factories.”

To Chad Moutray, chief economist for the National Association of Manufacturers, the word “reshoring” has an uncomfortable connotation.

“I prefer to say we are increasing investment in the U.S.” he said. “When you say, "reshoring,' you have the connotation that manufacturing should never have gone away in the first place. In fact, our goal should be to make the U.S. an attractive place for investment.”

Since the U.S. has the highest marginal tax rate in the world, Moutray said, making the U.S. attractive to investors begs the question of comprehensive tax reform.

“One thing even beyond the U.S. tax rate is the worldwide tax system,” he said.

“If companies bring foreign investment into the U.S., they will pay very high taxes, so a lot of production stays offshore.”

As well as tax reform, the U.S. needs to promote energy extraction from oil shale if it also wants to promote domestic manufacturing, according to Moutray.

“Moving forward, we want to make sure that energy production continues to thrive without the EPA and the Commerce Department issuing rules that might clamp down on shale exploitation and fracking,” he said.