Featured speaker William L. Strang, senior vice president of operations, TOTO USA told a crowd at MODEX in Atlanta that TOTO has substantially moved manufacturing of products destined for the US market from Asia to the US. “Seventy percent of the products sold in the US today are made in the US. As few as seven years ago, 63% of product we made in China was destined for the US. We are incentivized at this point to make product domestically in the U.S. rather than procure from our factories in China.” Mr. Strang went on to explain that keeping design close to the customer base and getting product to market faster is a win-win. What about a third “win?” The environment. The move reduced the company’s carbon footprint: fifty percent of all the power TOTO USA buys to power its Georgia manufacturing facility comes from Georgia Power Green Energy.
Many other companies are examining re-shoring as a tool for effectiveness and efficiency. Work we completed for the American Society for Quality reinforced the finding that companies routinely view manufacturing processes as ecosystems to be optimized from supply base to consumer. Companies are weighing proximity to demand and proximity to innovation as key drivers for manufacturing-location decisions. Sometimes there is a clear trade-off, and sometimes there is no tension between proximity to demand and proximity to innovation. We saw alignment of innovation and demand in GE’s R&D efforts in India: the development of low-cost diagnostic devices robust enough to be carried into rural villages and inexpensive enough to be marketable.
Robotics and automation reinforce effectiveness/efficiency. Recent work Geo Strategy did in the field of robotics points to dropping equipment costs and faster ROIs. Manufacturers’ ability to move operations to high-cost locations adjacent demand fulfills the premium on shortened supply chains without significant cost impact. Companies like Tesla, Apple, Flextronics and Lenovo are creating jobs in the US- jobs that once may have gone to China, Mexico, or Poland.
Automation is the great equalizer. Automation allows us to take products and move them to other places in the world – places like Fort Worth, TX. – Mike Dennison, President, Flextronics’ High Velocity Solutions
Those plants will be more automated than vacated plants so the workforce must be skilled. Talent must rise to the challenge, which means educational institutions and government entities become part of the ecosystem supporting the re-shoring of viable advanced manufacturing.
Nancy Musselwhite is Senior Consultant of Geo Strategy Partners, a B2B/Industrial focused market research and Strategy consulting firm.