Trade & Industry Development Magazine

September/October 2011
Trade & Industry Development - September/October 2011

The manufacturing process has changed dramatically over the years, but at the core it is still the art of creation and production. Everything from shoes to CPUs to airplanes owes its existence to manufacturing. And in the U.S., the long overlooked importance of manufacturing is starting to reemerge. One of the few bright spots in our halting economic recovery has been manufacturing, and now the realization is dawning on policy makers that a “knowledge-based” economy cannot stand on its own and be sustainable unless it is also linked to the application of that knowledge – which means manufacturing.

In this issue, we examine manufacturing from several different angles, and offer advice to executives looking to expand their facilities. Paul Hampton, of Newmark Knight Frank, offers pragmatic solutions to companies that need to add facilities but are also focused on environmental initiatives. In his article on working with utilities, Larry Gigerich, of Ginovus, provides significant insight into what indications to look for in choosing a worthy utility partner. And Harry Moser, founder of the Reshoring Initiative, provides bottom-line value in his examination of the total cost of ownership, and how it relates to sourcing components and siting facilities. Also, Jennifer Alten examines the benefits offered by Foreign Trade Zones, and Linda Dobel takes a look at some of the designated sites in North America. Douglas K. Woods, president of the Association for Manufacturing Technology, provides a clear snapshot of manufacturing in America and the developing trends. And Dennis Donovan, of WDG Consulting, charts the outlook for facility expansions throughout the rest of the year and into 2012.

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In this issue...

Executives from a broad range of manufacturing disciplines can confidently consider the timeliness of investing in U.S. based factories to manufacture products for the U.S. market. Boston Consulting Group and Accenture recently reported that Chinese net unit manufacturing costs are rapidly converging on U.S. costs. Chinese wages are rapidly rising (approx. 20 percent/year) and the Yuan is gradually appreciating (approx. six percent/year) and expected to rise faster as China fights an inflation rate two to three times the U.S. rate. So Chinese labor costs are rising rapidly and their productivity is, and will be, far below the U.S. level. As a result, by 2015 Chinese unit labor costs will be close enough to the U.S. level that the Chinese Total Cost of Ownership (TCO) will be higher than for the same products produced in lower cost U.S. states such as in the Southeast. (TCO includes the obvious direct costs such as the price plus all of the other costs, e.g. duty, freight, carrying cost, travel, etc., that impact the company’s P&L.) For this economic trend to have a rapid impact on the behavior of major U.S. companies, however, the companies will have to calculate their TCO. Unfortunately, most companies’ calculations are rudimentary, rather than complete, mainly comparing prices rather than the entire costs of offshoring. In fact, Archstone Consulting’s 2009 survey showed that 60 percent of manufacturers ignore 20 percent or more of the cost of offshoring. Accenture’s 2010 survey confirmed the results with 61 percent of respondents acknowledging the need to implement TCO. As a result, companies have offshored more than is in their own self interest. Total cost of ownership and other concepts and tools from the Reshoring Initiative help companies objectively decide which work to reshore and which to offshore. more...

Corporate Site Selection in 2011/2012
It’s Not the Critic Who Counts
Manufacturing: Furthering the Triple Bottom Line Through the Site Selection Process
The Impact of Utilities on Site Selection Decisions – The Good, The Bad and The Ugly
Total Cost of Ownership Analysis: A Key Tool for Expansion
AMT: U.S. Manufacturing Improves, but Outlook is Uncertain
Policy Positions from the National Association of Manufacturers
Special Reports
Designated Sites to Shortlist
Foreign Trade Zones: Preserving American Jobs and Leveling the Competitive Playing Field
Success in the Heart of the Heartland: Missouri CORE
The State of Kentucky: Bluegrass Built - Kentucky Manufacturers Forge Innovation and Growth
Manufacturing in New York: Opportunities for Growth
State of Tennessee: Jobs4TN: A New Approach to Economic Development in Tennessee
Ohio: Moving Manufacturing Forward
Manufacturing Thrives in North Carolina



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