Reshoring US Manufacturing - Fad or Good for Business?

by: Andrew L. Shakely, PE, LEED AP BD+C | NuTec Design Associates, Inc., President

There’s been a lot of talk lately about whether the previous decades’ trend of sending manufacturing operations to overseas countries with cheap labor can be reversed, and if U.S. manufacturing can be brought back to its former glory days. 

There is evidence that “re-shoring” manufacturing to the U.S. is a growing trend, but are there sound business reasons beyond being able to wave the flag as part of a PR campaign? If you listen to Walmart, the world’s largest retailer, there is.

I recently attended the Walmart Manufacturing Summit in Denver, CO. The summit was organized to bring together material suppliers, manufacturers, and state economic development departments to promote the regrowth of manufacturing in the U.S. This was created to support of Walmart’s initiative to purchase an additional $250 Billion of U.S.-made products in the next decade. They hope to do this by purchasing more of the U.S.-made goods already in their stores, sourcing “new to Walmart” U.S. made goods, and supporting their suppliers in re-shoring the manufacturing of goods currently manufactured abroad.

This event featured keynote presentations and panel discussions from senior Walmart management, including president and CEO Doug McMillon and U.S. president and CEO Greg Foran. Additionally, $4 million was awarded to seven research institutions that are developing new manufacturing techniques. These developing technologies address obstacles to increase domestic manufacturing in textiles, apparel, general manufacturing, and assembly processes.

So what value does Walmart see in U.S. manufacturing? Walmart’s long-standing mission has been to “save customers money, so they can live better.” While this is often perceived only as cheap prices, it was emphasized throughout the summit that it also means providing a wide variety of quality products, providing products that are relevant to their customers wants, and providing products through a variety of platforms including retail, internet, and mobile. Walmart believes that U.S. manufacturing supports all three of these goals by:

Improving cost, quality, and sustainability by taking advantage of the latest manufacturing technologies

Reducing transportation cost and carbon footprint by manufacturing goods closer to the point of sale

Being able to rapidly respond to order volumes based on changes in consumer demand

Being able to quickly adjust product design in response to consumer wants

Shortening procurement time so product buyers have to speculate less on what will be popular in 12 to 18 months

Ultimately, there is one other benefit Walmart sees in U.S. manufacturing: it supports local communities and economies, which in turn allows more families to become customers.

The world’s largest retailer understands the circular economic benefit to both their supply chain and their customer base. With Walmart’s public declaration of their commitment to strengthen U.S. manufacturing, other companies and manufacturers will also begin to reevaluate the economics of their overseas manufacturing. With this, the “hidden values” of manufacturing close to the point of demand will begin to be appreciated and U.S.-made will again be more than good PR.

To learn more, contact Andrew L. Shakely, PE, LEED AP BD+C at ashakely@nutecgroup.com or 717.434.1526. To view a replay of the live podcast from the 2014 U.S. Manufacturing Summit click here: http://news.walmart.com/events/2014-us-manufacturing-summit.