CLEVELAND (March 19, 1:05 p.m. ET) — Businesses looking for low-cost markets in which to manufacture their products increasingly are turning to what's emerging as a surprisingly affordable option — the United States.
“The costs in China and other places have been rising so rapidly, it's becoming more obvious to companies they should bring a lot of the work back to the U.S.,” said Harry Moser, a retired manufacturing executive, former Cleveland-area resident and founder of the Chicago-based Reshoring Initiative. Moser's mission these days is convincing companies to move operations to the United States from other countries.
Moser, who runs a website called ReshoreNow.org, spouts off recent examples of U.S. companies that have “reshored” operations back to the United States. One of his favorites is California-based Wham-O, maker of one of the most iconic of American toys, the Frisbee.
Two years ago, Wham-O moved half its Frisbee production to California from China, along with the production of some other plastic toys to Michigan. The changes created only a couple dozen jobs in the United States, but Moser likes the example because it shows that almost anything can be made profitably in this country.
“There's nothing much simpler to make than a Frisbee and there's no place in the U.S. more expensive than California or Michigan,” he said. “So if you can bring Frisbees back from China to California and Michigan, you can bring anything back to Kansas.”
A larger example of reshoring is in North Canton, Ohio, where Suarez Corp. moved the entire production of its main product, EdenPure portable heaters, from China to its home turf, creating more than 400 jobs at the peak of its production season last fall.
“We were producing it all overseas — large volumes overseas,” said Michael Giorgio, Suarez's general manager and chief financial officer. “But it made sense to move it here from an economic and strategic standpoint.”
Labor costs were going up in China, Giorgio said, and upgrades to the product were difficult to make when engineering was on the other side of the globe from the company's manufacturing operations.
There's another reason the move made sense, one that came into play in a big way this winter: Suarez now does not need to order all its heaters six weeks or more in advance, but instead can make them to meet demand. Had the company still been making heaters in China, Giorgio said, Suarez would have ordered enough heaters to see it through a typical U.S. winter, only to have the weather dash its hopes.
“We would still be sitting on a substantial amount of inventory. but, as it was, we were able to produce to order,” Giorgio said.
Suarez also uses local suppliers for much of its materials and components, and Giorgio figures his company's production supports at least another 125 jobs at those suppliers.
“It takes four pallets of parts to make one pallet of heaters, so you can imagine what the supply chain was doing,” said Giorgio, who noted that the company made more than 400,000 heaters in 2011.
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