Not Made in China

Because of long lead times in China, Hy-Lite had to keep large inventories in stock to cover potential orders. Carrying that much excess inventory, Murphy says, is a “high-risk proposition” because it’s nearly impossible to anticipate which colors, designs and models customers may want.

By moving production in-house, Murphy says, Hy-Lite avoided keeping several hundred thousand dollars’ worth of inventory on hand, saved on warehousing costs and reduced the risk associated with carrying goods that go unsold. Reshoring also enabled the company to provide better service to his customers. Another added benefit for manufacturers is the good will engendered among customer by the “Made in the U.S.A.” label. “It certainly doesn’t hurt,” says Murphy.

While it’s unclear precisely how many manufacturing jobs have shifted back to the Sunshine State, Florida Trend was able to count about 1,500 reshored jobs at a dozen companies.

That trend, however, appears unlikely to make more than a dent in 80,000 factory jobs that disappeared in Florida between November 2007 and November 2010. As of July, manufacturing employment in Florida stood at around 315,000 — a 2% rebound from its low point in 2010, but still far short of 390,000 manufacturing jobs the state boasted in 2007. The sector makes up 5.3% of the state GDP.

In addition, companies that bring jobs back from overseas tend to couple the move with capital expenditures to increase automation — meaning that when a business reshores, 300 jobs in China don’t translate into 300 jobs in the U.S. The more labor-intensive a manufacturing operation is, the more likely it is to stay overseas, company owners say.

“The cost of sophisticated machinery, automated machinery has come down. The advances in technology in every sector in this world now are moving at a mind-boggling speed,” says Eric Higgs, CEO of LumaStream. The St. Petersburg company has been developing and manufacturing its products in Canada and Taiwan but is now consolidating its operations in St. Petersburg and is partnering with St. Petersburg College to provide hands-on manufacturing training and help create a labor pool for about 1,000 jobs the company expects to create over the next five years.

“You can have one person that’s running two or three machines,” says Higgs, “instead of one person for each machine.”

Even so, the Boston Consulting Group estimates that the reshoring trend will directly and indirectly create 2 million to 3 million jobs in the U.S. over the next decade, reducing unemployment as much as 1.5 to 2 percentage points and lowering the non-oil-related merchandise deficit by 25% to 30%. The consulting firm calls its predictions conservative.

Tags: Manufacturing/Distribution, Not Made in China, Reshoring