Offshoring not what it once was

We live in extraordinary times. You can tell because people are creating their own words, and society adopts them without questions. It's fantabulous.

Metal fabricators should embrace this new word with open arms: Re-shoring. Manufacturing jobs that once went overseas because of low-cost labor are apparently coming back in a large way. In fact, the folks at the National Tool & Machining Association (NTMA) and the Precision Metalforming Association (PMA) are so excited about it that they have made it the theme for their May 12 contract manufacturing trade event: "Re-shoring: Bringing Work Back to the U.S.A."

Plenty of anecdotal evidence exists that this may be a true trend. I've heard snippets of stories from certain metal fabricators, but hardly enough to see the end of offshoring in the near future.

However, evidence is mounting that China is not the panacea for all North American manufacturers.

Lo and behold, with the credit being frozen in 2009, many manufacturers needed access to cash so that they could keep the lights on. In the past, those companies may have relied on lines of credit to help them eke out the slow times on the manufacturing calendar, but that wasn't happening last year with banks calling in all of their debts. Instead manufacturers looked at their supply chain for financial assistance.

For many, this meant taking possession of supplied components as soon as possible, so the manufacturer could assemble the final product and make a sale. It's all about conversion of goods to cash. Needless to say, waiting on a boat to arrive from China with parts does not exactly jibe with the thought of a lean and mean supply chain.

Companies simply don't have the luxury of waiting for goods and services of any kind. Could they now be thinking local instead of global?

Large manufacturing companies also are asking more of their metal part suppliers, and working with a local company has to be easier than dealing with a foreign company half of a world away. The local folks can be more aggressive in presenting cost reduction possibilities in a design and generally be more engaged in improving part design. That's the difference between a partner and a contractor, a lesson that more U.S. companies seem to be learning.

Finally, China is turning a cold shoulder to the U.S., according to FMA's resident economist, Dr. Chris Kuehl. In his newsletter, Kuehl said the Chinese business community has the ears of the country's leadership, and the last thing that those Chinese businesses want is an open market that welcomes foreign competitors. That's resulted in a China that has become very inhospitable to foreign companies.

"Foreign direct investment in China has deteriorated in the last year and is on pace to be as low this year as it has been in over 20 years," Kuehl wrote in his newsletter.

Face it, U.S. multinational companies. China's just not that into you.

Re-shore and chillax with your metal fabricating bffs. Can I get a "word" from the audience?