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Instead Of Reshoring, Think ‘Manufacturing In Markets Of Consumption’

Manufacturing closest to - or near - consumption delivers more economic, ecological and customer value.

I’m a big fan of the concept of Reshoring. Manufacturing builds wealth. Manufacturing creates jobs upon jobs upon jobs. And manufacturing replenishes itself, by accepting and training its next generations to carry on. Repatriation of the right production to the US is necessary to meaningful recovery.

And I’m also a big fan of The Reshoring Initiative – and its Sherpa, Harry Moser.  They’ve done and are doing remarkable things to educate businesses on ‘total cost of ownership’ and trumpet the advantages of re-engaging US manufacturing into supply chains.

But Reshoring as a concept in and of itself likely isn’t sustainable. It’s a great start, but does it leave money on the table? Maybe simply repatriating production based on the same premise (costs) – even if Reshoring is a more accurate and thorough premise than that which sent jobs (and more) away in the first place – doesn’t do enough to ensure this won’t happen again.

There’s more at stake here. Instead of only focusing on Reshoring, we should be pushing the concept of ‘Manufacturing in Markets of Consumption (MIMOC).’

Reshoring only focuses on the specific sourcing decisions of US or Western manufacturers – that is, what was sent away and what can be brought back.

But what about the US manufacturers that SHOULD manufacture in China or another country, to better serve & sell directly into those markets?

MIMOC can influence the greater strategies and policies – of companies AND governments. By focusing on the value of shifting production to where consumption happens, where collaboration and innovation happen, where supply & demand chains are more agile and efficient, and where responsiveness to customer & market demands is faster, we allow companies to seize opportunities that are economically, socially & politically valuable in the US, AND overseas.

MIMOC as a concept offers the same benefits as Reshoring, but also brings with it other advantages that simple repatriation cannot:

  • It Encourages Exports – Embracing MIMOC focuses resources and intellect on creating manageable supply chains within countries & markets. Identifying target markets and investing in those markets via suppliers and other service providers help to craft trade agreements that benefit both parties by creating wealth in ALL markets – via jobs, investment & sales.
  • It’s Sustainable – Shorter supply chains managed within markets of consumption create smaller carbon footprints, require fewer resources & are more easily scalable. Establishing collaborative manufacturing clusters is good for ecologies, and economies. But it also makes businesses more agile & responsive to market demands and proclivities.
  • It Simplifies Politics & Public Opinion – By maintaining a Reshoring posture, we ensure an ‘us vs. them’ outcome. We’ve all seen the finger-pointing of late – at China, at our government, at the 1%. But by distinguishing mutually beneficial MIMOC strategies from ‘re-exporting’ strategies (like what we’ve created in Asia), we can intelligently discern the difference between what we stand to gain and what we stand to lose. With such clear distinctions, politicians and policy makers can easily tell the difference between the two, we can negotiate sensible trade deals, and the public can easily follow the progress and hold them accountable.
  • It Creates Jobs – There will always be production that follows lower labor costs. But by establishing and adhering to a policy of MIMOC, active markets can sustain more stable manufacturing employments and create myriad jobs that support them. Simply put, the strongest markets see the most jobs.
  • It Creates, Nurtures & Moderates The Global Manufacturing Network – Face facts: we’re in an emerging global manufacturing environment. It’s been evolving since the 80’s, and we need to become more of a manager in this process than a reactor. Directing production toward markets gives innovative countries the motivation to seize upon opportunities, while distributing technologies, prosperity & stability around the world. And this distribution based on consumption also supports and grows the sovereignty of any nation’s manufacturing sector as production jobs are created & investments are made. Put another way, free trade stops wars. But free trade must include fairness, and an MIMOC distribution helps better ensure that happens.

The central problems we face from offshoring so much of our manufacturing base stem from the unfounded belief in foreign production for domestic consumption. The same goes for any US-based company manufacturing for foreign markets – why manufacture in North America for sales in Eastern Europe? Does that even make sense anymore? It shouldn’t.

MIMOC also does something important for some larger corporations that shipped so much production offshore – it gives them an ‘out.’ Right now, as the importance of manufacturing is finally starting to get the attention of the US press & public, it’s uncomfortable or downright embarrassing for a corporation to repatriate production in the open. It’s like admitting they made a mistake, or worse. MIMOC not only encourages repatriation, but it also gives some of these corporations an acknowledgement that there are global solutions in manufacturing and they weren’t entirely wrong.

Soft drink manufacturers have known about MIMOC for years – look at Coca-Cola’s approach to global markets through bottlers & distributors. They’ve manufactured, marketed, innovated and sold close to consumption for years. Here, and abroad. And that strategy sure hasn’t hurt their bottom line.

And there are many examples of manufacturers from other countries seizing on MIMOC strategies by producing in and for the US market. BMW. Hyundai. Volkswagen. Toyota. The list goes on …

Low-cost manufacturing sources will always have their place. Tell an entrepreneur with a dream that she can’t send prints out for the lowest cost prototypes she can find – to China, or anywhere else. I’ve seen many of ‘em succeed beginning with this strategy. And that shouldn’t stop.

But entrepreneurialism isn’t what got us into this mess. Had we approached global & export strategies as a nation that focused on MIMOC rather than the cheap-labor lotto, we’d have lost a lot fewer jobs in this country. And you can bet the lack of skilled labor, loss of tax revenues & weak economic recovery wouldn’t be nearly as severe as they are right now.

Reshoring is absolutely in our best interests, to reset the abdication of our manufacturing base, capabilities & infrastructure. Its merit isn’t in question.

But by broadening our interests to include expanding the US manufacturing base into other markets rather than away from them – including our own – all stakeholders would be a lot better off.

AJ Sweatt
Website
2 Comments
  1. Great points! Yes, we need to avoid blindly reshoring for the sake of reshoring. It makes perfect, sustainable sense to locate manufacturing closer to consumption, something I thought we were figuring out after the earthquake in Japan helped us realize the benefit of a local supply chain.

    • Thanks for the visit and excellent point. I’m the biggest fan of reshoring you’re likely to find this side of Harry Moser, but we should be smart about it. And we should understand that reshoring alone won’t serve to make the US (or any country) as globally competitive as we (or they) are gonna need to be.

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