A trade meritocracy

Last week, when I visited Fisher-Barton South Carolina, Alex Robertson, business development manager, showed me a part on the shipping dock—a part he was proud of. The contract manufacturer had won the job about eight months ago. And it beat a quote from a stamper and fabricator in India.

Here’s the kicker: This was just the piece-part price. It didn’t include the added inventory expenses, shipping time, and all the extra risk that comes from working with a faraway supplier (risks spelled out by Harry Moser’s Reshore Now organization). The savings came through simpler tooling, innovative heat treating, better blank shape for downstream forming—basically, smart design choices, combined with an unusual mix of machinery that gives the operation a competitive advantage (to be covered in an upcoming issue of The FABRICATOR magazine).

This week Joshua Kurlantzick of BusinessWeek wrote a column about the fact that, for the first time in decades, growth in free trade isn’t outpacing world economic growth. The column goes on to describe the fallacies of protectionist barriers—all true.

But one of the things he doesn’t mention is the inherent inefficiencies of long supply chains for various products. A global supply chain may not be an agile supply chain.

As Harry Moser has mused many times in recent years, it often makes sense to source locally to maintain quick response and flexibility. If a product has sufficiently high volumes and global demand, it may make sense to open factories (and a cluster of suppliers) close to the consumer, be it in the U.S., China, or anywhere else. For low volumes or large machines requiring massive capital equipment investment to make them, such as mining equipment, it may make sense to make in one place, then ship globally.

Put another way, free trade shouldn’t mean companies need to source globally. They should instead simply source where it makes business sense to do so.

Despite the reshoring trend, stateside manufacturers these days—including Robertson—still fight the perception that overseas is cheaper. It all comes down to price, and now, some of the best stateside manufacturers are giving the best prices. The best part: They may be just down the road, not halfway around the world.