The Benefits of Localization
Supply chain woes hang over the economy from COVID-induced shortages, ripples from the Suez Canal container ship blockage and U.S. West Coast port congestion. While some companies are struggling with global supply chain disruption, others are struggling with demand spikes brought about by shifts in consumer behavior due to the pandemic. Whatever the complication, companies with localized supply chains fared better.
Companies Prosper With a U.S. Footprint
Chicago-based, charcoal and gas grill manufacturer Weber Stephen Products is experiencing overwhelming demand for its grills due to more people cooking at home during the pandemic. But Weber fared better than many with pandemic-induced disruptions because they retain a large U.S. manufacturing footprint.
“We still have some impact when dealing with ocean containers but it’s generally reduced compared to our competitors who are mostly importing from China,” said Chris Scherzinger, CEO of Weber. “Because we have a large U.S. manufacturing footprint, we’ve been insulated to some degree but it still means when the demand spikes like it has, we have to rally and produce at record-setting levels.” Scherzinger credits localization, new technology and a dedicated staff for a successful response to the increased demand.
Stanley Black & Decker has been building a competitive edge through digital transformation with a dedication to innovation, technology and training. Sudhi Bangalore, Stanley Black & Decker’s CTO for Global Operations and Global Vice President of Industry 4.0 says one of the goals integral to supporting this transformation is to “Build where we sell, and source where we build.” Stanley Black and Decker CEO John Loree concurred: “We have a philosophy of ‘make where you sell.’ When we purchased Craftsman in 2017, we were determined to revitalize this iconic U.S. brand and bring back its American manufacturing heritage.” In 2019, Stanley Black & Decker invested $90 million in a 425,0000 sq.-ft. facility to shift production of its Craftsman tools from China to Texas, creating 500 new U.S. jobs. The company reported no increase in costs and “much less impact from the coronavirus than would have been the case if it had remained in China.”
Foreign Direct Investment
Family-owned German automotive supplier Kirchhoff Automotive is investing $15 million in its sixth U.S. factory in Lawrenceville, Georgia, creating 73 jobs. Kirchhoff, which prides itself on operating factories near its customers to reduce parts inventory with a just-in-time strategy, makes structural auto body components like front ends, chassis and cross beams for Mercedes-Benz, BMW and other automotive customers.
A $2.7 million investment in a joint venture between German and Japanese chain manufacturers (iwis-Daido LLC) will bring production of automotive engine chains to Murray, Kentucky. The facility, originally opened in 2015, was the first U.S. operation for iwis for the production of timing drive systems for engines. The partnership will add 10,000 sq.-ft. of space to produce automotive engine chains for major auto manufacturers and create 37 jobs.
Setting Up Shop in the U.S.
Southern California-based Mullen Automotive announced plans to create 800 jobs and deliver 100,000 electric vehicles (EV) within a five-year time period. With a long-term lease on an 820,000-sq.ft. facility in Memphis, Tennessee, and the recent purchase of a facility in Tunica, Mississippi, both facilities will provide advanced engineering and manufacturing capabilities to support Mullen’s manufacturing requirements for the next decade. “Memphis’ location makes it a primary logistical hub for distribution throughout the U.S. and will provide Mullen with key strategic advantages. The local and state-level administrations are both fully supportive of our manufacturing plan and are showcasing their commitment with significant financial incentives that will help us grow along with the city and state over the next decade,” said John Taylor, vice president of Manufacturing for Mullen.
Reshoring and Economic Growth
Reshoring enables risk mitigation, resilience, agility, responsiveness and faster time to market. As the reshoring trend accelerates, it will drive more economic growth by creating jobs, reducing unemployment and balancing trade and budget deficits.
New York-based Hardinge is shifting the manufacture of its milling and turning machining center solutions from the Hardinge Taiwan plant to its plant in Elmira, New York. They cite supply chain interruption, natural disaster and political instability risk as negative factors to offshore and image/brand and impact on the domestic economy as positive factors that made reshoring attractive.
“We are very excited to make this move, as it brings the products closer to the customers we serve and leverages the many years of experience we have in Elmira. It also enables us to bring capabilities back to the U.S., which we are extremely proud to do,” said Chuck Dougherty, who was then president and co-CEO, at Hardinge.
Through reshoring, you can meet consumer expectations and reconcile concerns about far-flung supply chains. At the same time, you can deliver quality products while eliminating the hidden costs and risks of offshore manufacturing. CS