As reshoring interest rises, consultants offer assistance — and one Pa. manufacturer offers a warnin
Thanks to COVID-19, bringing manufacturing work back to the U.S. is a hot-button issue again. Now, some business organizations are offering companies their assistance bringing facilities back to American soil.
Their pitches go like this: After decades of seeking out low-cost labor and access to new markets sent American jobs elsewhere, COVID-19 has exposed U.S. overreliance on offshore manufacturing, and with recent tariff spats with trade partners and rising wages overseas, “reshoring” these facilities and jobs is the way to avoid supply-chain risks.
Recent data shows reshoring interest is growing. New York City-based supplier network Thomasnet surveyed 878 U.S. companies in manufacturing and industrial sectors in April. Of those, 64% said they’re “likely to bring manufacturing production and sourcing back to North America,” a 10% increase since March.
Rapid Reshoring Solutions — a partnership of Huron, Ohio’s Cornerstone Consulting Organization and Juniper Solutions, a real estate agency based in Cleveland — is one new program capitalizing on that interest.
RRS is new to this world — as it was officially formed on July 15 — but to its founders, the business opportunity is clear.
“New York, Ohio and Pennsylvania actually lead the way in terms of searches for reshoring,” said Chris Ostrander, chairman and chief commercial officer of Cornerstone, citing figures from Google Analytics.
Though the pandemic may pose a renewed opportunity for this work, consultants and businesses emphasize that reshoring isn’t always a glamorous endeavor. Even for renowned examples, like one hat manufacturer in Lancaster County, bringing equipment and labor from overseas can be a drawn-out, costly affair with lots of prep work.
Founded in 1868, Adamstown’s Bollman Hat Co. is the oldest hat maker in the U.S. It’s famous for its Kangol line of hats, worn by celebrities like Brad Pitt, Gwen Stefani and Samuel L. Jackson. In 2015, the company brought dozens of knitting machines and jobs from Guangzhou, China, to its Adamstown plant.
Bollman had sold its Guangzhou factory to a Chinese hatmaker in 2006. Seven years later, the factory was struggling and there was an opportunity for Bollman to buy back the knitting equipment and put it elsewhere.
To explore bringing the equipment to the U.S., CEO Don Rongione used the help of the Steel Valley Authority, a team of layoff aversion specialists funded by the Pennsylvania Department of Labor that offers free help to companies who want to restructure their finances.
Bollman secured a $60,000 grant from the state Department of Community and Economic Development with the help of the authority’s Strategic Early Warning Network, which works with distressed manufacturers to save jobs. A separate Kickstarter campaign with Samuel L. Jackson raised over $100,000 and plenty of media fanfare.
But the cost of bringing over the machines, wiring the facility and bringing on new workers cost the company over $1 million. In 2017, because of higher wages and untrained workers in the states, Bollman was losing money with every hat it produced. It projected to bring over 41 new American jobs, but today, there are 12 employees working with the reclaimed equipment from China.
Mr. Rongione has advice for companies exploring reshoring: Figure out how to obtain the technology and the proper workforce first.
“If the work is less labor intensive and less skilled, it's easier,” he said.
That’s been Bollman’s biggest challenge. Workers overseas were capable of hand-weaving for eight-10 hours a day. In America, the “appetite for that work is low,” said Patrick Meese, head of SEWN’s Central Pennsylvania office in Harrisburg that worked with Bollman.
Also, location matters. Even though domestic production costs double what it does overseas, Bollman’s Adamstown plant still has strategic benefits. With 60% of the company’s consumer market in the U.S., the plant is used to quickly fill needs in the fast-paced fashion market, which constitutes about 20% of the company’s production.
For companies without a plant already in the states, finding a location can be quite difficult. Because of that, Juniper Solutions is responsible for the entire site selection half of Rapid Reshoring Solutions’ process.
Since finding a location, designing it and hiring new employees can be a years-long process, RRS is targeting its services toward companies that are looking to get these facilities “one or two years down the road,” Mr. Ostrander said.
Also, reshoring isn’t a panacea for every problem. COVID-19 has created countless business struggles, and companies have been waiting too long to get consulting help, said Bob Value, who manages the SEWN program.
“Having owned companies before, you've got to have a bit of an ego. It’s hard to get to that point where you’re like, ‘I need help,’” he said. “We’re trying to get to companies early enough in the game where you can still salvage a firm instead of somebody calling you when their bank’s workout department has a gun cocked to their head.”
However, for manufacturers with the resources to reshore, consultants agree there is “a certain level of pressure and patriotism” to bring facilities to the U.S., said Dennis Burnside, Juniper CEO. Sometimes, that pressure applies to the consultants themselves.
“Cornerstone being a veteran-owned company, and being a veteran myself, there is a patriotic level of excitement for us here to be part of something bringing back jobs to our country and having the ability to help support that,” Mr. Ostrander said. “It means a lot to me and means a lot to our company.”
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