On September 28, 2016 the Senate Economy, Business and Jobs Caucus – chaired by Senators Mensch and Boscola – and the Senate Manufacturing Caucus – chaired by Senators Farnese and Ward – held a joint session open discussion regarding reshoring/offshoring ideas, automation, industrial robotics and 3D printing in terms of the impact of these issues on manufacturing and bringing jobs back to the Commonwealth and creating new jobs here in Pennsylvania.
Tom Croft, Executive Director of the Steel Valley Authority, testified about the effectiveness of the Strategic Early Warning Network (SEWN) in retaining and reshoring manufacturing jobs throughout PA. There are roughly 30 Pennsylvania companies bringing jobs back to the Commonwealth including Woolrich, Berner International, and K’nex. He stressed that more businesses and the Commonwealth would benefit significantly from a “Making It in Pennsylvania” reshoring task force including the partners shown in the graphic below.
In support of this reshoring effort and task force, Tom referred to Harry Moser’s Reshoring Initiative and the Boston Consulting Group who published a report noting there are a number of industry sectors at the “tipping point” in terms of reshoring. It is becoming more competitive and productive to bring production home. The report further notes the number of jobs re-shored nationally is getting closer to the number of jobs off-shored. For example, fabricated metal products saw over 20,000 jobs re-shored while computer/electronic products brought back over 15,000.
SEWN has done collaborative work on reshoring with over 185 companies, provided educational workshops, acquired funding for reshoring training with 5 companies, prepared regional supply chain analyses and marketing materials, and had 15 team engagements. SEWN has a unique approach in the business assistance community by providing financial assistance, restructuring and access to private capital; best practices for workplace strategies; organizational diversification, market development, and positioning; and specific customized programs for ever client.
Mr. Croft summarized SEWN’s mission is to identify and assist manufacturing companies that are experiencing difficulties and engage them in the program’s free turnaround consulting services before those companies reach the crisis stage. He also noted that layoff aversion reached national recognition with the passage of the new WIOA (Workforce Investment and Opportunities Act) which requires that states integrate such services as part of their Rapid Response Programs. Mr. Croft highlighted SEWN’s success in saving 6,038 jobs over the last five (5) years at an average cost of only $976 per job saved. The broader economic impact saved the Commonwealth more than $37.9 million in Unemployment Compensation benefits and resulted in over $125 million in state and local tax revenue.
Don Rongione, President and CEO of the Bollman Hat Company, then testified about SEWN’s effectiveness in assisting his company and other issues that he has faced in reshoring and creating new jobs. Located in Adamstown, Lancaster County, Bollman Hat is America’s oldest hat manufacturer. It is also an ESOP (Employee Stock Ownership Plan) company, meaning that each employee is also a part-owner of the company. Mr. Rongione spoke of the difficulties in maintaining the company throughout the Great Recession when the sales volume of his high-quality, American-made hats fell dramatically, resulting in the layoff of many long-time employees.
Even as the economy and hat sales have improved, Don addressed funding issues that his company experiences, partially as a result of being an ESOP. He described their successful “Motherfunder” Kickstarter campaign which included an endorsement from Samuel L. Jackson. The efforts of the campaign enabled Bollman to purchase and ship a specialized knitting machine from China and ultimately bring production of the Kangol hat line to Pennsylvania.
Bollman Hat Company still faces a few road blocks regarding its ability to reach full production capacity for Kangol. Don advised the Caucuses that finding qualified employees to run the new equipment and/or finding training programs for the equipment is an on-going challenge. Most state and federal loan programs require personal guarantees for loan repayment, making Bollman ineligible since they are an ESOP. Mr. Rongione stressed he was not asking the Senators for more money; he simply wants them to consider programmatic changes that would enable companies such as his to succeed, noting that Bollman is able to survive under the current regulations, but not thrive.
Additional testimony was provided by Eileen Cipriani, Deputy Secretary for Workforce Development and Partnership with the Pennsylvania Department of Labor and Industry; David Taylor, President and Board Member of the Pennsylvania Manufacturing Association; Dr. Evan Malone, President and CEO of NextFab; and Patrick Fricchione, President and CEO of Simplex Homes.