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MSU hosts summit on ‘reshoring’ jobs

August 20, 2012

By STEVEN NALLEY
sdnedu@bellsouth.net

Harry Moser grew up with the Singer Corporation’s sewing machine factory in Elizabeth, N.J.

For many years, Moser said, the factory was the largest employer in Elizabeth, a town just across the river from New York City. His grandfather was a foreman there, his father oversaw thousands of people there and he worked there during summers in high school, he said. At one point, he said, it was the single largest building in the world.

“That was when everybody had a sewing machine and the U.S. dominated the world in manufacturing,” Moser said. “I drove past (Elizabeth) a couple of years back, and it’s all gone. The factory’s gone; all of that production has gone outside the United States. My family tradition was lost. That was a major motivation for founding the Reshoring Initiative.”
Moser was one of several guests at Mississippi State University who discussed the paradigm shifts, economic forces and business decisions that could bring offshore jobs back to the U.S. as part of “Reshoring, Retaining and Growing Mississippi’s Manufacturing Jobs,” a conference held Monday at the Franklin Furniture Institute.

David Shaw, vice president for research and economic development at MSU, said he is grateful to those who made this program possible and he wants MSU to be part of the reshoring effort in Mississippi.

“(Mississippi State University) is completely committed to economic development as part of this university,” Shaw said. “This conference really highlights the role we see our university playing in making sure jobs return to Mississippi.”

Moser said the Boston Consulting Group expects net labor costs for manufacturing in China and the U.S. to converge by about 2015. This is because Chinese wages are rising, he said, and Chinese workers want American lifestyles.

“(Chinese factory workers) see how (U.S.) factory workers have a house and a car ... whereas they’re living in a dormitory (on their company’s factory grounds),” Moser said. “They conclude logically that they’re not getting their fair share of the pie. Their standard of living is going up, and that makes us more competitive.”

Moser said the key to motivating U.S. companies to reshore jobs is to get them to look not only at the unit price of items manufactured overseas, but also the total cost of ownership, or TCO, which adds transportation expenses, wage inflation, product liability, innovation and intellectual property risk to the picture, among other factors. The Reshoring Initiative compared these paradigms in 19 cases in 2012, he said, and while this study showed U.S. unit prices to be 189 percent of those in China, it showed the U.S.’s TCO to only be 100.4 percent of Chinese TCO.

Reshoring is also a bipartisan solution to America’s economic recession and budget deficit, Moser said. In today’s political debates, he said, there are Democrats who want to tax businesses and reallocate funds to consumers so they can spend money to grow the economy and there are Republicans who want to cut businesses’ taxes so they can innovate and invest to grow the economy.

“In either case, you’re not sure what’s going to happen,” Moser said. “In both cases, you’ve got a pie ... and (Democrats and Republicans) are both fighting over who gets the biggest slice, whereas when you reshore, you increase the size of the pie. I believe (reshoring is) the single best way to strengthen the U.S. economy.”

Reshoring is already in progress, Moser said, with more than 40 percent of contract manufacturers doing reshoring work this year. A study by the Massachusetts Institute of Technology says 61 percent of larger companies surveyed are considering reshoring manufacturing jobs, he said.
“My favorite case is Wham-O, which brought 50 percent of their frisbee and hula hoop production from China back to California and Michigan,” Moser said. “If you can bring frisbees and hula hoops back to California and Michigan, you can bring anything back to Mississippi.”

Brent Christensen, Mississippi Development Authority executive director, said the MDA works to pitch Mississippi to businesses as a low-cost, high-value resource with its work force as its greatest asset. As such, he said, MDA is focused heavily on work force training, preparing communities for incoming jobs.

When one member of the audience asked Christensen how to work with MDA to bring a business to a county, he said MDA does not specifically pick out counties and then look for businesses to bring to those counties. Rather, he said, the MDA looks for matches between the businesses’ needs and the resources in each county, such as training, building sites and natural resources.

“You can’t force a company on a community or a community on a company,” Christensen said. “We’re agnostic as to where we go in the state. What we need to talk to you about is being (ready for) economic development.”

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