The Manufacturing Executive
The Manufacturing Executive

Episode · 1 year ago

Bring 5 Million Manufacturing Jobs Back to the U.S. w/ Harry Moser

ABOUT THIS EPISODE

If we want to balance America's $800 billion trade deficit, we need to bring manufacturing jobs back to the U.S. — 5 million manufacturing jobs to be exact.

The ancillary benefits would be enormous. We'd reduce CO2 emissions 40-50%, slash the budget deficit, improve unemployment, and bolster national defense.

What's stopping us?

In this episode of The Manufacturing Executive, Harry Moser, Founder of the Reshoring Initiative, talks about his mission to bring 5 million manufacturing jobs back to the U.S.

Here's what Harry and I discussed:

  1. Why the U.S. needs its manufacturing jobs back
  2. What Harry's Total Cost of Ownership calculator can tell executives about the benefits of reshoring
  3. How reshoring can help eliminate the trade deficit

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We calculate that every one percent reduction in our selling price relative to the competition will bring back a hundredzero manufacturing jobs. Welcome to the manufacturing executive podcast, where we explore the strategies and experiences that are driving mid size manufacturers forward. Here you'll discover new insights from passionate manufacturing leaders who have compelling stories to share about their successes and struggles, and you'll learn from B tob sales and marketing experts about how to apply actionable business development strategies inside your business. Let's get into the show. Welcome to another episode of the Manufacturing Executive podcast. I'm Joe Sullivan, your host and a CO founder of the Industrial Marketing Agency guerrilla seventy six. When you hear the word reassuring, what comes to mind? Most people will immediately think about the jobs that will be created domestically, but the trickle down impact of those jobs goes much deeper, both for our economy as a whole and for the individual companies that make it tick. In today's conversation, will explore this topic of reshoring with someone who's arguably had more influence than anyone in recent years in the effort to bring manufacturing back home. Harry Moser is founder of the reshoring initiative, an organization whose mission is to bring five million manufacturing jobs back to the US. Previously, Harry served as president of high end machine tools supplier gf a g CHARMI, starting as president in one thousand nine hundred and eighty five and retiring in two thousand and ten as chairman emeritus. Largely due to the success of the reshoring initiative, Harry was inducted into the Industry Week Manufacturing Hall of fame. In two thousand and ten. He was named Quality Magazines Two thousand and twelve quality professional of the year, as well as Fab shop magazines manufacturing person of the year. Harry participated actively in President Obama's two thousand and twelve insourcing forum at the White House. Won The economist debate an outsourcing and offshoring. Received the Manufacturing Leadership Councils Industry Advocacy Award in two thousand and fourteen and the made in America two thousand and Nineteen reshoring award. Harry was recognized by Sue Helper, then Commerce Department chief economist, as the driving force in founding the reshoring trend and named to the Commerce Department Investment Advisory Council in August two thousand and nineteen. Harry is frequently quoted in The Wall Street Journal, New York Times, Forbes, Financial Times, New Yorker, Washington Post and USA Today, and seen on Fox business, Market Watch, PRI and P are, manufacturing talk radio and other national TV and radio programs. Harry graduated with a BS in mechanical engineering and an MS in engineering from Mit and followed that up with an MBA from the University of Chicago. Harry, that resume is no joke. Welcome to the show. Thank you, Joson honor to be here. Well, now that we hopefully we have some of it enough time left for the interview here, after I have read through all your achievements. It's it's pretty, pretty impressive and I'm excited to get into this and unpack some of what's stored up there in your brain from all these experiences. So well, Harry, I was wondering if you could just kick things off by telling us a little bit more about what exactly the restoring initiative is and why you found it it. Yeah, well, as you mentioned, are our mission is to bring five million manufacturing jobs to the US, and we pick five million because that's the number of jobs it would take to balance the trade deficit, to make imports equal to exports. Five million about a forty percent increase in manufacturing. And we do that by a combination of documenting the trend so that people can see how well...

...it has gone. Now, for example, when we started in two thousand and ten, in that year six thousand jobs were announced coming back, and in two thousand and seventeen a hundred ninetyzero were announced going back. So we're going up thirty times, partially because of us, but not entirely, and and then it fell off somewhat after that. So we did we document the trend because the best way to get a company see to decide to reevaluate its offshoring is to see the company's A and B headfully shored, a successful and involve who work for that. Maybe maybe we should try it. So we document and then we promote. Being with you today is promotion. I'll do seventy rady of these this year, podcast, webinars, etc. We write an article a week. We know we're very visible. We create make reshuring visible and then we enable so we have tools to help companies make the decision to reshore on their own or to convince their customers to reshore and buy from them instead of importing. So we're sort of a think tank and an advocate, advocacy group, but we're also out in the trench. Is actually getting it done. It's fantastic, very from your perspective. Why is it so important to bring manufacturing jobs back to the US? I think other people have a similar perspective, I hope. I hope they do. I think they increasingly do. But again, to to bring the five million jobs back to balance a trade deficit, a forty percent increase in manufacturing. Imagine all the companies listening. Imagine if your business was forty percent better. And of course there has to be enough workers, you know, equip and so look, forty percent more for everybody would be wonderful. Self sufficiency for the country we we've been through this issue with covid or. We don't make the mass and the gowns and the gloves and the ventilators and the Penicilla and then we decided that's doesn't make any sense for the world's leading country. And and we see the same issues in rare earth, minerals defend a lot of defense material. Now in a clothing ninety seven percent of our clothing is imported. G All kinds of stuff that were depended on imports. Income, equality. If you ask the youth these say what's important, a lot of more say income and equality. That's been unfair that some people don't make enough to live one and the best solution for them would be a good manufacturing job with career opportunity, career advancement opportunities or frenitship programs, etcetera. The environment. Most of everybody cares about the environment. When you shift manufacturing back to the US, depending on the product, the Coetwo emissions are cut by twenty five percent, thirty percent, something like that, and not bad. Defense Preparedness. If we want to be able to protect our country, and we sort of protect a lot of the world, you need to be able to make the material for that. Budget deficits. We've seen now we've got multi trillion dollar budget deficits going on almost indefinitely. And by bringing manufacturing back, having those five million jobs in the multiplier effect jobs, the companies will be paying taxes that people be paying taxes less unemployment and some and safety net expenditures, budget deficits come down, you guls will be more financially stable. So Nice emotional reasons, nice practical economic reasons. That's great. A Lot, I mean, so many great things there. It's it's a simplistic question, I guess that I asked You, but probably things that people aren't necessarily, you know, thinking about in their totality, about how many benefits are bringing these jobs back home of Harry, I know you developed a really nice tceo tool or which is short for total cost of ownership, of course, a calculator to compare offshoring...

...to domestic manufacturing options, and I was wondering if you could just talk about the concept of Tceo in this context and what impact that tool has had for manufacturers who have put it to use. But TCO is essentially the concept of looking at all of the relevant costs and risks, like when you're buy a refrigerator, but one might be cheaper, but if it uses three times of much electricity over a ten year life, it's not as good a deal. So so it actually we're saying the same. They can send kind of logic for when you're buying a casting or a machine part or a complete product of some kind of offshore versus domestic to come with too many companies. We survey says about six, six hundred percent look only at the way trade, only at the the HEX works or fob price leaving the factory, comparing that, and that's often twenty thirty percent less offshore, especially China, India, places like that. But when you add in the duty and the freight and the carrying cost of inventory, the travel costs, the intellectual property risk, the benefit of having engineering near manufacturing, able to discuss things in the same language, in the same time zone, to get together physically and the work on the problem, when you reduce the chance of stalking out not having the product when the customer wants to buy it. So heading in about twenty nine different factors like that, on top of the of the price, you get to a different often get to a different conclusion. And other examples you have of the you could site of just you know, things you've heard from from manufacturing people to how impactful this has been for them to put this tool to use. Sure a lot of people talk about generalities that they've done. That I heard somebody from Jennerac, chief operating officer, talking about I don't know if he's using our tool, but you just talked about using TCO and bring some work back. So the case where we were involved on one case where we were involved was more mrey Corp outside of Chicago there are a large ems company. They populate Circuit Boards, make some devices, use assemblies using those circuit boards and the VP of sales came to me maybe four years ago he said, Harry, we're going to lose this big water. Can you help us? I say what's going on? He said a Chinese competitor or offered a lower price, customers probably going to do it. So I helped Tony do the TCO calculation. He took it to the customer and he did it from the customers perspective. showed the customer that even though Maurice Price was higher, its total quest to the customer would be lower and I got a letter from from Tony saying that was the key to winning a sixty. That's zero million dollar order. So for the people out there that are listening, if you're fun sometimes competing with imports, or if you if you know if you have customers that you deal with, our companies you deal with and you know they're buying offshore and you're not getting a chance then using TCO to to show them the reality, to let them see that thousand and twenty thirty percent might not be enough price difference offshore. Come to our website. The TCO ES mators free to use. You sign up, you sign in email and password. We don't even ask you your name. You know it's your company name. You know so because you want to protect your information. But it's there to use both for buying, we say, for buying smarter and for selling smarter. Yeah, it's a really great tool. Of A client of mine who was actually recently on the show, who got into this concept of using TCO in the sales process. But you know, when you have numbers like this that can put it can put all this into context, it just makes it...

...makes it so much more clear you know what you need to do or what your options are. So I love that you've got a tool. I'd encourage anybody listening here to go go check that out if you're kind of you know, thinking about these the cost differences here between offshoring and doing it domestically. So doing it or buying it. You know, it's both for making the decision about what a I making my factory here versus my factory there, and what do I buy from somebody there versus buy from somebody here? So, Harry, I am no economists and this is not not my area of expertise by any means. But you know, you kind of touched briefly a few minutes ago on, you know, the trade deficit issue that that we're facing here, and I'm just kind of curious if you can dive a little deeper into that one and talk about the role that reassuring can play and alleviating this sort of compounding issue we've got. Okay, I think it's important to first understand why we have a trade deficit, because you can't fix something until you know know what it is. And the trade deficit is the difference between our important our export. So for the last several years we've imported eight hundred or nine hundred billion. That's with a big billion dollars more than we've export. And and the overwhelming, obvious reason why that happens is cost or price differential, that the US manufacturing cost. You know the FO the REX works price is too often, not all the time, but too often, twenty percent, fifteen, twenty percent higher than Western Europe and forty percent higher than China and maybe even more for Vietnam, Cambodia and so on. So so that and that to that price. That's what try. People didn't go buy from China to put a made in China label one and they went and and twenty years from the thirty years ago, you can get everything here in the US you wanted, and therefore they didn't go because you couldn't get it here. They went for the price and the that sudden question is will why is there such a price? Your Frenchialal a couple of things. I think. I probably most simplest is the US dollar. US dollar, almost every economists degrees, is twenty, two, thirty percent higher than it should be. And why is it higher? Where the reserve currency? Individuals, companies, countries that have excess assets, at excess cash, they put in dollars in the United States, which say buy dollar, forces up. The dollar makes a dot us a great place to be a bank, but not such a good place to have a factory. So so, in effect, if we weren't the reserve currency in that and that premium came out of the dollar. Are prices relative to the other countries would come down by fifteen percent, twenty percent, so something like that. So it's a substantial amount, at least half of, let's say half to two thirds of what it would take to balance the trade devas so so many economists would agree. Obviously get the dollar down, and there's there's several mechanisms for doing that for probably all acceptable with the World Trade Organization. So we are shure go. The second thing would be the skilled workforce. Germany has wages as high as ours and yet they have a huge trade surplus. Enough, and it's clear to me that much of that is due to the fact that they sixty percent of their kids go into apprenticeships and and you US maybe four percent, and here they're mostly in construction, almost none in manufacturing. So if we, if we had really smart kids who here would obviously go on to university, but instead we're becoming toolmakers, welders, precision machinists, the chemical technicians would have you, they'd be...

...better off because they'd be making more money and the country, you better off because we'd have the skills and the capacity to as all too both to be competitive and to produce the additional output that's results from being competitive. So dollar skilled workforce. Get the skilled workforce you need. You need much better basic education. We're pretty far down the list. China's number one and reading, math and science and we're way down to less. So they're working for a third or fourth as much as we are and they're much better educated better training than we are now. How you going to win that race? Not, not very likely. Corporate tax rates head were way too high. Now they're about average, and yet the government wants to raise them. That's not a good idea. Regulations. We should have a value added tax of that. Typical fat rates are about fifteen percent. So pry prices can go up if you have to adjust other taxes accordingly to be equitable. But the net result is when another country ships up stuff to us today, we do not apply a bad tax to it and they get a company gets a credit over there for what they ship us. When we shive things to them, our company does not get a credit because we don't have a bad tax, but the VAT tax gets charged when it goes into their country. So huge differential. Just do to not having a VAT. Are Our healthcare costs or fifty percent higher than most company countries, Germany, places like that. If you got our healthcare costs down to Germany, where they have just as good healthcare, then that premium, that extra medical cost, would come out of our benefits, would reduce our labor costs, which would make manufacturing, you know, a couple of points more competitive. And just to put that in perspective, we calculate that every one percent reduction in our selling price relative to the competition will bring back a hundred thousand manufacturing jobs. So when we talk about well, that's only a percent, but it's a hundred thousand jobs on average. Is that's all us. If you're one of those hundred Tho you say yeah, that's that's important, and I think it just that the for decades there has not been a concern about the trade devin. If that's what the market says, it should work out to with them. Let it be, and that would be fine if the dollar were determined by the trade deficit how it used to be, but now it's determined by these trillions of dollars slashing around into the US. So a lot the government can do. Hey, what actionable advice can you give oh m's or other manufacturers along the supply chain about how to start exploring, ressoring options? Yeah, I think what you just said then is important. If I'm at a company to hrry, what should we do? I don't say I don't found the table and say bring it all back. You know, I don't even say bring back twenty percent of it. I say reevaluate. Look at what you're importing now. Now we're talking about the buying decision. Look at what you're importing now and look for the parts or the products that are causing pain, where there's late deliveries, too much inventory, quality issues, intellectual property risk, a lot of travel people go into the supplier to work out issues, all the people staying up till midnight to make telephone calls because of the time zone difference. Was See and any of these kinds of issues. Identify a few of those parts because in each each of those cases there's going to be a champion in the company, the guy who's doing the travel and doesn't want to travel, the midnight telephone caller or, you know, the Service Department that has the warranty experience. They'll be a champion there to help provide the information, to quantify what those risks and losses have been so that when you get to doing the actual...

...calculation, it's not poor, Harry, they're trying to fill out the form. You got people inside who are credible and have experienced the pain to look for pain and and and tell them I'm not here to help you re sure, I'm here to eliminate pain. I'm here to make life better in the company, kind of. And so do that. Pick three four parts and and hopefully one or two of them will turn out favorable, and implement those and then, and then look for more. So we don't say turn everything over, you know today, we say get the process, start to do the reevaluation and then, over some months or years, bearing back what makes sense. It's good advice, Harry. Is What did I not ask you about here, that you think it's important to communicate around this topic of restoring specifically, I mentioned our our TCO estimator. Now again it's free online anybody to use it to buy smarter or sell smarter. Specifically, we can help companies, like companies that are buying and they're not sure how to get started. They can retain us to come out and help them. They don't, shouldn't need us, but they can do that. In terms of the selling smarter, we have a program called the import substitution program. So a company can sign up for that, this disrecharge for and they identify a product. Let's say they say I'm really good at making widgets. Be heare's a widget, and we tell tell them who the biggest importers of widgets are, what tonage to bring in, whom they're buying them from off shore, roughly what they're paying for it, and then we train our company to use TCO to make the case to the importer that the importer will be more profitable to not to right now. That's tendency is you walk in, you see that importer, if you happen to find them, because they don't even know who a lot of more. But if you have to walk in, Don any widges next year? Well, China was sort of sloppy during the crisis and now they're okay, if we have a have a shortage, we'll call you. Instead, you walk in and say, I know, I know, you're buying a lot. You're buying fifty tons of widgets. We've got this new multitasking machine for making widgets. We've done the quest analysis. Labors only ten percent of our cost to our price can't be more than ten fifteen percent higher than what you're paying fob in China or India. And we've calculated all the hidden costs and there's twenty points of costs. They are. We're convinced you're going to be ten points that are off buying from us than continuing to import, and you're going to bring jobs back to your company and to your suppliers and your community duty and you're going to improve the environment, income of qualities the United States. It's helpful the budget deficits of so there's got to be somewhere here that our two companies could make this work out for the better men of most, better betterment of both of us. And then, once we do that, will let Harry know about it and he'll write a great article about us and we'll all be famous for what are you doing? So so let's let's keep going on this import substitution TCO import substitution program help companies make better buying decisions. And then we also have something called the supply chain gap program so we've identified supply chain gaps, which are where there's a lot being imported, say a hundred million or more year dollars, and nothing, or almost nothing, being made here. Think, think two years ago. Mask gowns, gloves, ventilators, Penicilla and stuff, all the stuff has become fair. So we've created a list of hundreds or thousands of items that fit those criteria. And so, for a stake, you know, New York, Wisconsin heavy. We can start with that national list and then narrow it...

...down to products that are heavily imported into the state or neighboring states, that are heavily imported by the leading companies in the state. Okay, the ones that are in industries that the state would like to tract. Now we're down to maybe a list of twenty or thirty products, and then we can we tell the state who the biggest farm suppliers are, the companies that are actually shipping the product in, and then the state goes to those companies offshore, starts with whichever one, maybe number two, whatever, and says, why don't you put a factory right here in Ohio, because we've got all these companies nearby. Nobody around here making it. Almost nobody making it in the states. You've got ten percent of the market. Now, if you were the only company making it in the US, you probably have twenty or thirty percent of the mark. And if you don't do that, I'm going down the street to your competitor. I'm going to get them to do it and they'll kick your ass out of the market. So come on, let's get going and do what's right for both of us. That's a it's really a powerful tool, though. I mean well, we'll say anybody there, if you're if you work for the state, can you call or email or or talk to the people you know when economic development in your state or or Big City? And we're here. We're here to help. You know, I've got this mission of five million jobs to bring back and and you know they're coming back right now at the radar of a hundred fifty, two hundredzero a year and just take years. So I need your help and accelerating the trend. It's a great mission. Harry's there anything you want to say to put a bow on the this conversation? First, first, Joe, I've I'm Honder you know that you do. You have me here and and all the listeners. We can help. We can help you by smarter, we can help you sell smarter, but I can only do it if you contact me, and so the URL was wwww dot org. Harry Moser, you can find how to reach me at the website and I look forward hearing from you and making your company more successful and the your state in our country, a better place to love beautiful well, Harry, this is a great conversation. I really appreciate you doing this today. Thank you, Joe, and as for the rest of you, I hope to catch you on the next episode of the Manufacturing Executive. You've been listening to the manufacturing executive podcast. To ensure that you never miss an episode, subscribe to the show in your favorite podcast player. If you'd like to learn more about industrial marketing and sales strategy, you'll find an ever expanding collection of articles, videos, guides and tools specifically for bdb manufacturers at Gorilla Seventy sixcom learn thank you so much for listening. Until next time,.

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