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HANOVER TWP. — Reshoring — the practice of bringing manufacturing and services back to the United States from overseas — of manufacturer operations has declined for the past four years, according to the second annual A.T. Kearney U.S. Reshoring Index report.

The report, released in December 2015, analyzes public data and shows “manufacturing activities to the United States has once again failed to keep up with offshoring.”

“There will be 12 cents worth of offshore production bound for the U.S. market for every $1 of domestic manufacturing gross output — manufacturing sales,” the report states.

Northeastern Pennsylvania Industrial Resource Center (NEPIRC), located on Young Street in Hanover Township, works with global manufacturers to help bring “component parts (screws, nuts, bolts, etc.)” back to the United States, more specifically, to Northeast Pennsylvania.

Eric Esoda, president of NEPIRC, believes “manufacturers can’t change quickly.” Esoda also cautions people to not associate “reshoring with American jobs.”

American jobs, he said, will be part of a “delayed (job) creation.”

“Things won’t change on a dime,” said William Schoen, career readiness program coordinator.

Esoda also questions if the reshoring/Made In America initiative from prior years was a sales tactic for the holiday or if the “(big box retailers) really ever lived up to their own internally set goals.”

What is reshoring?

Reshoring is the process of returning outsourced products to the United States. The process became standard around the time the North American Free Trade Agreement took effect.

“The labor cost was so much cheaper, the transportation cost was so much cheaper, energy cost overseas was so much cheaper,” Esoda said.

Businesses were able to take the hit for a damage/defective product because of the inexpensive price of the good.

“It’s almost as if you had nine good parts out of 10, you were still up money,” Esoda said.

Manufacturers had done leg work and vetted suppliers in international markets, and the supply chain became “comfortable” offshore.

NEPIRC uses “cold hard facts” and “TCO (total cost of ownership) tools” to quantify the offshore cost of a product. Offshore cost looks at currency change, shipping costs, insuring inventory as well as warehousing and holding the product until use.

“(If the offshore company) wants you to put it (money) into an escrow account, you’re tying up the money for three to four weeks, opposed to three to four days (if you buy domestically),” Esoda said.

Schoen warns about hidden costs when factoring in the “real cost” of a product. The cost of shipping delay of a product is one of the bigger hidden costs.

“We don’t see those (hidden costs) but those are quantifiable numbers that add to the overall per unit cost of an item,” Schoen said.

Made in America

Assisted through federal and state government monies, NEPIRC strives to help manufacturers grow and thrive in a local eight-county region.

Esoda said the Northeastern Pennsylvania market is ripe for stamped and perforated metals — polished steel around an exhaust, exterior steps with grates for drainage — production.

“The backbone of our economy is the local manufacturers,” Schoen said.

Reasons to manufacture local range from currency exchange rates to political uneasiness in a country, but the biggest is the challenge of having another supplier see specs of a product.

“Do you feel comfortable giving them that insight (design components, specifics) into your company?” Esoda asks potential companies who want to reshore.

Bringing manufacturing back to Pennsylvania, or the United States, can also stimulate the local economy.

“They’re going to need more landscaping; they’re going to use more electricity,” Esoda said.

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Esoda
https://www.timesleader.com/wp-content/uploads/2016/02/web1_Eric-Joseph-Esoda-2.jpg.optimal.jpgEsoda
NEPIRC aids companies wanting to make products in US

By Melanie Mizenko

[email protected]

Reach Melanie Mizenko at 570-991-6116 or on Twitter @TL_MMizenko