Reshoring US Manufacturing Business
Reshoring US Manufacturing Business
For reshoring US manufacturing Business there are many factors to consider. Our guest today is helping businesses reshore manufacturing work to the US.
In this week’s The Faces of Business Episode, our guest speaker was Harry Moser. Harry is the founder of the Reshoring Initiative. His organization promotes awareness and education to help businesses reshore manufacturing work into the US .
The conversation started with Harry sharing his childhood and his family’s long history in manufacturing.
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He said that initially as a teenager he worked at the Singer sewing machine company, which was the biggest manufacturing company. As he grew up, he knew he has to go into manufacturing because his family worked in it.
However, he still studied engineering at MIIT. After this, he eventually got into manufacturing for work. After this, Damon asked Harry about his career and said that it might help people understand things better.
To this, Harry responded by saying that he started off in the GE manufacturing management program and only stayed there a year and a half. After that, he worked at MIT industrial Liaison Office exchanging technology. Moving on, he shifted a few jobs and got to the peak of his career at the EDM machine.
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Moreover, Harry mentioned the importance of customer service reshoring US manufacturing business. He said that when you correctly treat the customers, they make effort for you as well. Further explaining the reshoring US manufacturing business, Harry shared how he started his business.
According to Harry, he started his business when he was once passing again from the singer sewing machine factory. At that time he had recently retired and had enough money to start something on his own.
This is when he decided to do some good for the world and started reshoring US manufacturing business. Further, into the conversation, Harry explained in detail about his business. He said he started with making a cost of ownership estimator.
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After this, he said that when it comes to reshoring US manufacturing business, you just have to do the math correctly and be a little more aware of the surroundings around you. By the end of the conversation, Harry talked about the TCL estimator. He said that the best tool to estimate the total costs is TCL.
Moreover, he said that if someone is confused about how to use it, they can coordinate with him. The conversation ended with Damon thanking the guest for his presence.
reshoring, company, people, manufacturing, offshore, harry, china, apprenticeship, years, factory, skilled workforce, college, product, reassure, kids, business, paying, country, big, cost
Damon Pistulka, Harry Moser
Damon Pistulka 00:01
Hello, everyone, Welcome once again to the faces of business. I’m your host, Damon Pistulka. And I am really excited for our guests today. Today I’ve got Harry Moser with the reshoring initiative. Welcome, Harry.
Harry Moser 00:18
I bet you say that about all the boys, David. But it’s great to be here.
Damon Pistulka 00:21
But man, I am excited because you talk about something that I think is a cool topic that people are really, really, I think paying a little more attention to recently than they have in the past. Or at least I hope they are. So Harry, you You are the founder of the reshoring initiative trying to move manufacturing work back into the United States. I’ll briefly talk about that. But let’s talk about your background first, before we get in there, because we’ll talk about the reshoring initiative and how you got in that. But tell us about how you got into manufacturing and a little bit more about that.
Harry Moser 01:04
So I grew up in Elizabeth, New Jersey, the biggest thing in town was singer sewing machine. And my grandfather was a foreman there, my dad ran about a third of the factory, the factory in his day was the biggest factory in the world of 5000 workers, two and a half million square feet. This is 1900 kind of time. And I worked there summers in high school and college. And so I from when I was 14 or 15. I worked in a factory and and my dad had that traditional grandfather though, so obviously, I was gonna go into into manufacturing.
Damon Pistulka 01:42
Yeah, yeah. So when you were that young? What What did you like manufacturing? Or was it just a job?
Harry Moser 01:53
Well, I can’t say the food family have always done it. And, and it was real, it had substance. You could see the end product. Yeah. Good people to work with, you know, salt of the earth people in manufacturing. So it was a it was a great, great experience. I hear I was a 1415 year old kid working with these 5060 year old people have been doing this all their life. And and we’re and we’re just wonderful people to work with. So I know. They made a lot of sense. Now. Eventually, I actually went I went away to college. I started as a chemical engineer, and and eventually switched over to mechanical. And but manufacturing was always more or less the plan.
Damon Pistulka 02:38
Yeah. Yeah. So you went to MIT for your for your college for your engineering college anyway. And you got to be s then an MS in mechanical engineering, correct? Correct. Yeah. So you know, MIT procedure school. And what did you really enjoy about school?
Harry Moser 03:01
COVID coeds. I had a good High School background. So MIT was hard, but it wasn’t, you know, impossibly hard. And I actually I really liked thermodynamics. Mechanical Engineering subject. I was good at everything, you know, sort of a moral lesson mechanical, but in thermodynamics, for some reason, it’s just all clicked and I was I was a plus, I was just just knocking him out. And he transfer the good, really the thermodynamics, so I lives in a fraternity.
Yeah, moved in before freshman year started and stayed there through graduate school so I lived five years never lived in a dorm one day. And for you know, for a bookworm, you know, coming in from Yeah, not every been especially socialized, so to speak, to be at the fraternity and the parties in the other people ever. It was a very good, good background. It helped make me much better at working with people and getting things done.
Damon Pistulka 04:11
Yeah. Yeah. That’s, that’s cool. I didn’t have to say thermodynamics was not one of my favorite, favorite subjects in college. I’ve got a mechanical engineering degree as well. I think mine was really when I got into internal combustion engines and that kind of stuff. And, and actually, one of the most interesting classes I took was atomic physics, which I don’t know why, but it really clicked with me. So God decides to talk to another engineer that actually knows what you’re talking about when you talk about thermodynamics class. It’s a it is a little different track in college that for sure to do engineering. But
Harry Moser 04:49
that’s, that’s one of the problems. Most most American kids believe they’re not good at math. They’re not good at science. And as a result, I think Something like 3% or 6%. Of Us degrees are in engineering. Yeah. And in China 30% are engineering. Yeah. And so so you got people over there willing to work for a lot less willing to work really hard because they’re still hungry. And, and with a team 10 times as big as our team. Yeah, that’s pretty tough competition.
Damon Pistulka 05:25
Yeah, you’re right. You’re right. And I think you make a good point. Because, you know, I think I think back to my kids, and that my kids were, they could have done engineering school, but they chose not to, because they, they would say the very same words that came out of your mouth, they didn’t think they were good enough at math and science or didn’t like math and science.
But I tell you, I think the the people that do foray into it and do it, they will find a very, very rewarding career ahead of them if they take the day or just seize the opportunity. And it’s not easy. I mean, this, you and I both know that it takes work to get through engineering school, but the opportunities that it provides are second to none really,
Harry Moser 06:11
it took work to study Latin. That’s a career opportunities are a lot better. And
Damon Pistulka 06:21
that’s, that’s true. That’s true. That’s, that’s for sure. Well, I want to pause for a second Gail. Hi, how are you doing today? great seeing you here. And Gil Robertson’s a good supporter out of Canada. Gail is part of the Canadian molding Association. And she does a lot of work with injection mold manufacturers in Canada. So that’s interesting. That’s where I started out in manufacturers in manufacturing is in molding. And I stayed in that for a number of years. And I really enjoyed that.
Harry Moser 06:55
For whatever it’s worth. I was the I think 1998 sp, mold designer of the year. Really? Yeah, even though I never designed a mold. They were they didn’t have anybody that was really appropriate. And I and they were impressed by the work I’d done on skilled workforce. Yeah. And so let’s, let’s give it to Harry.
Damon Pistulka 07:22
Yeah, let’s talk about that. Because you’ve done a lot of work in in the skilled workforce improvement and to talk a little bit about why you you kind of keyed in on that. And, and, and started helping people that
Harry Moser 07:37
it ties eventually into the reshoring concept, and that the Germans, for example, have incomes, about the same as ours, maybe even a little higher. And, and yet they have a trade surplus, equal to 5% of their GDP, while we have a trade deficit equal to 3% of our GDP. So that difference of 8% for us would be $1.7 trillion a year, which would employ about 9 million manufacturing workers if we were as manufacturing intensive as Germany is. And why ascribe I ascribe a lot of that different mode, many, many experts were described a lot of that difference to the apprenticeship system.
Yeah. Switzerland and Germany very similar. I know Switzerland better, but about 60 that six oh percent of a high school kids at the age of 16 go into an apprenticeship. They stay there too, is typically a four year apprenticeship. When they get a great academic training while they’re in it. They get incredible hands on training or combination of the two. Yeah, I’ve taken tours to switch four different tours of us apprenticeships, apprentices and shop owners to Switzerland to see the Swiss system.
And these kids that you’d meet are, if you met them, you’d say wow, these are really sharp college kids and you’re and they can talk about anything you want to talk about. And and they could do it in typically in English, French and German. Yeah. And, and they’re on their way to becoming great tool makers or welders or precision machinists or you know, whatever automation builders or something like that. So, and and because they come into the company, at the age of 16, they get the training. Most of us they are in the company, they know the product, they know the process, they know the other employees,
they know the customers, they work their way up within the company some go on to get a university degree engineering management. So and typically the the senior management of these, what they call the middle shot the the mom and pop kind of fit 20 to 500 people companies to typically the The senior management started as apprentices. Wow. Whereas in the US, as you get towards the higher side of that, you would expect them to be NBA A’s or, or some something as an accountant who bought into the company, you know, these are people that work that we have, really.
And as a result, they’re better throughout their career on average than our people like, I took out, I took one of these apprentice tours to one of the biggest Swiss machine tool makers, not my company, different company, and, and the head of applications engineering development for the world. He said, when we develop this five axis machine, when we develop the process for Germany or Switzerland, we do it in one setup on one machining and get it done. But when we’re doing it for the US, because on average, the programmers and the operators are not as skilled, we break it down into two setup setups.
Now, the chances for error, the chances for inaccuracy, the productivity, because you don’t put it on once and let it run for forever, you got to take it off and put it somewhere else. So the US just is not competitive. Overall, I’m sure best people are as good as their best people. But our average isn’t as good as their average. Yeah. And yet we’re we’ve got to compete with them on their on the world market. I was at a good size, maybe 100 150. Person us very high precision said something like Swiss turning, and and I said Whom do you have problems competing with?
He said, The Germans know they can, they can make the stuff as good or better than weekend. And they can sell it for 10 or 15% less than we can sell it for the end. And yet they’re buying roughly the same equipment, you have to be me the difference is is the skilled workforce that are, you know, programming and running the machines. So, so I’ve always put a high priority on for the country to get those people. But at the same time, then obviously for the company, because if the companies all had those people the country would succeed. But for the worker, I i’m i’m very unhappy that our country does a horrible job of telling them about the opportunity.
So yeah, as, as an example. back about eight years ago, the Department of Labor called me to Washington DC, to tell them how to get the workforce ready for the Florida work that was coming back from offshore. You were the secretary of Labor’s conference room, Harry, and six or seven of them. And they said, okay, you’re ready we have. And I said, Okay, and I pulled up one of their websites. And I said, I thought you guys were responsible for us to have the workforce we needed. And he specifically you’re responsible for the National apprenticeship program. He said, yeah. I said, Well, here’s this website. And it says, education pays.
And it’s a typical bar chart that shows income going up with number of degrees, no high school, high school associated. And, and I said, it’s interesting, I look at that chart. And nowhere on there do I see the income of people who’ve passed an apprenticeship. So guidance counselor’s economists, mayor’s parents all over the country, they’re trying to decide what Johnny and Jill should do. And then they’re told that the the only correlation is with number of degrees. And they never told that an apprenticeship or or a good stacker credentials, actually produces on average and income just as good as the bachelor’s degree does.
And if the government isn’t telling them, how do you expect them to find out because it isn’t, because the guidance counselor’s aren’t going to invent this out of out of out of nowhere, right? So, and, and they they fold in, they changed that website, they added some words about apprenticeship. But I was going on today and I still find lots of charts on do well and Department of Education saying the same thing. And so I’m I’m in the process of emailing Deputy Assistant Secretary of Labor and offering my help to audit their websites and help them see to get it right.
Damon Pistulka 14:20
I mean, this is this is something and we’re a backup to that just a minute before we finish this this conversation because I want people understand your experience too and where you’re coming from when you talk about skilled workforce, but this is something that I I see I feel in our in our country we’ve missed is that you know, going to college doesn’t necessarily mean that this is the best opportunity for everyone. Right and that’s kind of what has been played off as and, and and then the people that don’t go to college.
We’ve lost that apprenticeship we’ve just seems like we’ve lost it. We’ve lost the fact that And you can you can work and we’re talking about manufacturing today. Or you can go and go into apprenticeship and be a plumber or an electrician or are these are good jobs, these are good career decisions for somebody. Whereas, and I know this is maybe a good career decision for some people, but working at Domino’s Pizza, and working in a manufacturing facility as an apprentice and being able then to move on, it’s, I would bet that they’re going to be happier being the apprentice in the mat and working in the manufacturing facility so
Harry Moser 15:35
long, certainly 1010 years later. And certainly if they tend, if they take the career opportunities, they have one piece of data that they got the guidance counselor’s I’m sure never give them that turns out guidance counselor’s main job is to get the kids into the best college they can get into because High School is measured by the high school, the colleges that the students go through the data, one piece of data that they never give out, is that at any point in time, about 35% of all people who have a bachelor’s degree, or any job that does not require a bachelor’s degree, yes, they’re a Starbucks.
They’re doing something like that. And and some of them have gone back and become plumbers and toolmakers. So they can make an income. So they could pay off their college. Yes. Okay. Yes. And yet, if the kids were if it had their nose rubbed in that 30% of you if you go on to college, or going to be in jobs that don’t require a college degree, so instead of picking up $100,000 in debt, and four years not making any money, why don’t you start off with an apprenticeship, maybe I did a study about eight years ago.
And I compared to an English major to a toolmaker and said, I looked at the FT income and cash flow starting at the age of 18. And the toolmaker starts out the apprentice starts making money. And the English major pays money, okay. And then I took half of the higher income that the toolmaker had, and put paid taxes with it. And the other half invested at 7% per year. And at the age of 49, the toolmaker had a million dollars more net worth than the English major. Yeah. Because it comes always higher. And there wasn’t that negative cash flow at the beginning. Yeah, that seems the guidance counselor’s pass on that out. No,
Damon Pistulka 17:29
no, no. And I as you look at it, too, and when you think about this, they are being measured by how how, you know, flashy the colleges that their kids go to, that’s for sure. Well, we’ve got a couple real quick, we got some comments here from Kenneth Hello, Canada, thanks for Thanks for getting in here. And he says getting going to college doesn’t guarantee you a job either.
That is that is something that that’s bothered me a lot in that in with you, my kids are in their 20s and out of college or nearly out of college and you know, a lot of their friends have gone to college for degrees that you really wonder what, what what they’re going to use that for. And often they fall into that category that you said that they’re working in a job that doesn’t require a college degree. And they don’t, it is just negative cash flow at the beginning.
Harry Moser 18:19
I’ve got this, I got this great cartoon that I often use in my presentations. And it’s it’s a kitchen in a restaurant, and this young kid, maybe 25, cigarette long hair, we’re doing the dishes, and then for four or five other guys cleaning the floor, doing whatever all I’m looking sort of and, and one of them says to the kid stop complaining. All of us have PhDs in English literature.
Damon Pistulka 18:52
Yeah, yeah. Well, I mean, it’s sad but true. I mean, even years ago, I my one of my brothers did a MBA at Notre Dame. And he had gotten his undergraduate at a different school, much smaller school. And he would he would lamented, or the people that would pay the, the the price to go to Notre Dame and get an English degree or a degree that was was you know, you knew you were going to go out and not really get a high paying job with it. So it is it is something I definitely need to need to talk about. And I sure I sure appreciate you sharing that information with us on the skill of manufacturing.
But let’s back up just for a moment because we’re sitting here talking about we kind of got off on the skill of manufacturing, but you’ve got a you’ve got a pretty solid viewpoint to be talking about these things because you graduated from MIT in mechanical engineering and then you you started in the GE manufacturing management program. And then you know, tell us about your your career because I mean, you’ve I’ve Got a few of them written down here, but kind of tell us about your career because I think it’d be helpful for people to understand that because your experience gives you real world background to talk about these subjects.
Harry Moser 20:15
So it’s been a while, like you remember all the started in the GE manufacturing management program at large steam turbine generator in Schenectady, sort of the beginning of you, you might say, and then nuclear power out in San Jose, and only stayed a year and a half and left and came back and worked at MIT, industrial Liaison Office exchanging technology, economic science, you know, whenever you with big companies around the world, it was great at formative kind of thing, left that and they came more technical director than marketing director for a decent Matic molding machine big automated molding equipment for foundries went from I hope
I get this right in order went from there to what was then called Acme Cleveland, which owns national Acme, and Cleveland twistorial to great us industrial companies, both of which Cleveland there’s a brand still but not a factory is not a factory anymore.And national Acme just completely gone and left there became president of roto finish vibratory finishing machinery, nice little company, good product, and then my my peak of my career shermie EDM machine at that time, EDM and, and eventually also high speed milling and laser and so on.
But there was a, it was a wonderful job I, when I came, the company was in total disarray when I came in, and probably couldn’t find anybody else to take it. And we were like number seven or eight in the North American industry. And within about six years, we were number one, you know, and to take it from, you know, wait, I hear your way up now, new products from corporate wonderful team. Great view.
But But what a wonderful collection of, of employees and distributors of customers. That thing I think I did best. I traveled probably a third of the time going to see customers. And what are we doing right? What are we doing wrong? Yeah, what’s differently it says, then I come back and work with our team and figure it out. And eventually, we identified all the things we should be doing, answering the phone, having the spare parts available, having service engineers available to fix, you know, training methods, etc. And then we started to measure all those things. and post them all as department head metrics.
Yeah, KPIs. And one of my best days, we one of our competitor, competitors, we picked up their distributor in Michigan, and Bob Palmer. And then he came in and I say, Bob, let me give you the tour. And he said, and he said, because I always took customers prospects around for the truck. And he said, Harry, I’ve heard all about the tour. He said, What do you mean? Well, when we were selling against you, the the prospective customers told me how wonderful the tour was, and how strong he does everything right. And we had nothing to answer. And I’m glad to be on your side, guys. That feels good.
Damon Pistulka 23:39
It’s so great. That’s so great. Well, I mean, what you did a charm, show me is is really good, basic business practice. It’s listened to your customers. Let them tell you what you really need to change. And then make sure you’re doing it right.
Harry Moser 24:00
No. So when i a lot of the other machine tool, company presidents would go to the AMT meetings, wonderful thing to do a great Association cetera. And I went to the ntma meetings, the National tooling and machining association meetings where all my customers were so I’d be there with 100 of the shop owners, and no other machine co salesmen anywhere in sight.
So, one time, one time I’m, I’m talking to a new member. And and another guy, Dwayne Schreiber comes over and Dwayne says to Bill, Bill, don’t let Harry take you to dinner and bill says, Hey, Harry and Joe are gonna take me out and Sue out to dinner. Oh, nice enough guy. He’s gonna bang. And Dwayne said, about three years ago Harry took surely immediate dinner. And since then, I have what $3 million?
Damon Pistulka 24:55
Yeah, well, I mean, it is. It is I mean, it’s the way it’s building the relationships and having a good product. I mean, that’s what it is doing the right things and building relationships is how you build businesses.
Harry Moser 25:10
Yeah. And I tell people, no, you know, me, if my team isn’t some person performing, if you’re not, if you can’t get the service, you can’t get the spare part. You can’t get something. Try the system, but eventually call me. Yeah. And so so then they knew the president and these other companies, they typically didn’t know the president. So they had a higher feeling of confidence. Now, you know, sometimes did I have to push bill in front of Jim, you know, it’s because I had the relationship with Bill, you know, and was that fair to Jim? I don’t know. But But overall,
Damon Pistulka 25:46
yeah, yeah. No doubt. So your background and running and being in and running these different businesses, you got to see, I mean, you think about from turbines to nuclear energy to, you know, being a knowledge base thing and MIT and then into these, the manufacturing companies manufacturing these end products, and sometimes very technical and products?
Yeah, you’ve seen the importance of a skilled workforce and, and good, good apprenticeship are training programs for the employees and how that that really can affect the business. So that’s, that’s why I wanted to cover it. So as we’re talking about the skilled workforce, and how that how that plays into our current state in the United States of manufacturing, you come from a meeting of a position of knowing and living it.
Harry Moser 26:41
So 50 years of living it?
Damon Pistulka 26:45
Yeah. Yeah. But, but I bet there’s not too many of those years that you would you would say, I could get I could leave that.
Harry Moser 26:54
No, actually, there were maybe two years or three years out of 50. That I was not delighted. Yeah. All the rest of the years. These are well, this is as good as it gets.
Damon Pistulka 27:09
Yeah. Good. That’s awesome. That’s awesome. So you got this get this career, you get this stellar career going on in your in your getting getting near the end? And you’re, you’re like, well, what am I going to do? So? You founded the reshoring? initiative? What what? I mean, what a pyramid Did you have that you were going to try to take this that made you just decide I am going to take this on?
Harry Moser 27:36
Was that actually an epiphany?
Damon Pistulka 27:38
Yeah, I just Yeah, definitely. Say the wrong words, because I just gotten going for it. But epiphany. Yeah. What did you What?
Harry Moser 27:47
What did I mean? I mentioned singer, and yeah, I drove past the old singer plant in Elizabeth, which again, was a Colossus in its day, and nothing is made there anymore. As far as I can tell, nothing is made of singer anywhere in the country. Everything important far as I can tell, yeah.
And during my career, selling machine tool selling foundry equipment, company, after company, industry after industry that I had targeted to sell to shoe machinery makers, textile, machinery makers, that machine tool companies, foundry, equipment, companies, competitors disappear, they just get wiped out that the dollar would go up, like in 1985. And another third of the industry would disappear, because you couldn’t possibly compete with Japan and Germany, because your costs were just so high because of the dollar, having grown up so much. And, and so I said, this is not acceptable.
Yeah. And then somebody has to do something about that. And, and so I was retiring from shermie, George Fisher, and Hatton, and I had, I thought I was the right guy to do and I, I knew imports and exports, I knew manufacturing, economics, commerce. I’d written and presented a lot. So I had contacts throughout the industry and in the media. And I said, well, and I had enough money, that I didn’t have to go and get another job. So I said, Let’s, let’s do some good for the country.
Damon Pistulka 29:20
Yeah. So I still it kind of blows me away, because where do you start? Where do you start with something like this? I mean,
Harry Moser 29:31
initially, the The first thing I really almost the first thing I did was to write the TC o estimator. So total cost of ownership estimator, which is probably what we’re best known for. And it’s Think of it as a spreadsheet and a company that is trying to decide Should I offshore should i resharper should I source to offshore source domestically, they start with the fob or Ex Works price.
So the factory pricing in the US and the other source, and then it helps you it in duty freight packaging carrying cost of inventory, risk of stocking out intellectual property risk 29, different things like that. And when you get done with that, when you start out you say, you know, China 20 30%, lower the US, of course, China, but what you did it all stuff, and it’s either the US wins, or maybe it gets down from 30% difference, maybe to a 5% difference. And then you say, Hmm, if we were starting some new equipment, and we did a little lean regional training, we got the workforce really engaged, we can knock 5% out of the cost.
Whereas if you said, Can we knock 30%, of material burden and labor? Well, that yet unless you’re horrible to start with is not going to happen. Okay, so in either, when you see you do this TCL he gets you gets it down to where it’s feasible. And to show you the power of that, I took the first 180 cases of China versus the US where the user had done the calculation with the spreadsheet. And of the 180 cases. 8% of the time, the US had the lowest price. But 32%, we had the lowest total cost. And if there happened to be a Trump 15% tariff 46% of the time the US won.
So just by doing the math correctly and recommend noising everything instead of just looking at the experts price. Yeah, you go from 8% of maybe 46%. And that’s it. So So we say that, for most companies, most products, something like 20 or 30% of what they import, they would bring back, if they did the math correctly, then and here’s the TCU estimator on our website free, you sign up, you sign in you use it, there’s examples, there’s explanations, there’s formulas, as you can see the formula. So you know, we’re not making it up somehow behind behind the curtain. And then people do it. And yeah, not all of them, but some of them decide to bring the work back.
Damon Pistulka 32:12
Well, I think I think what you’re this I’m glad we got into this because i’ve you know, obviously we’ve I’ve seen this before and looking at your your TC o ‘s total cost of ownership estimator for manufacturers, I think most manufacturers don’t really even consider the cost of that extra inventory and and the risk and the other things into it. They’re just looking at, you know, cost five bucks cost four bucks, three bucks, whatever. And that’s how they make the decision.
Harry Moser 32:43
survey says that’s what they do. That’s that about 66% of them. Look basically just at the price. Yeah. And and now, is there a trend towards GCI? Sure, hope so. I’ve been doing this for 10 years. Yeah. So it’s and, and Thomas Thomas net, just did a survey and asked companies, how do you decide where to source and they said TCL. You know, that was the biggest, not huge, but but the number one choice, I felt pretty good.
But they’re still I had a big aerospace company. And this is maybe seven, eight years ago. And I was already presented a I SM meeting something like that. And I’m sitting next to supply chain manager with big aerospace company. I said, Phil, how do you how do you decide? He said price? I said No, you can’t. He said European company is multi multi billion. Yeah, I said well, he said, Well, here’s this housing and it goes like this. I’m thinking 500 pounds. They said we we cast it here. We airfreight it to China to be machined, we are afraid of back here to be plated, we are afraid of back to China and be machined again, back here to assemble it into the end product now.
And when we make the decision to do this, instead of doing it all here, we only look at the price for the machining and the component and whatever. And we do not include the airframe, we do not include the carrying cost of inventory or the paperwork or the delay or anything else and making the decision. Really. So I said, Yeah, and this is this is one of the 10 or 20 biggest companies in the country. That’s amazing. So if they’re that bad, we’re at least then you have to assume those 1000s of others that are basically doing the same thing.
Damon Pistulka 34:29
Yeah. Yeah. Because it is, you know, I’ve been involved in it before where we had we’ve had, you know, making the decision on onshore offshore, how you’re going to do it. And I’ve been fortunate enough. In most of those situations, we did look at the total cost of ownership. And when you start to do that, it is like you said you look at it and it’s a 30% cost differential, whatever offshoring it, but when you start to look at the inventory costs and and you know being able to react to to demand And changes or things like that and how much you have to commit to, if you’re if you’re starting out with a new product line or something like that, it really, that cost gap shrinks pretty fast.
Harry Moser 35:14
So as my favorite example, there’s a emfs company to make printed circuit boards, more Mori Corp outside Chicago. And they came to me, about five years ago, the VP sales, he said, Harry, we’re about to lose a big order. Can you help us? I said, Okay, what is it is it will attract Chinese competitor offering a lower price. And so I helped Tony do the TCL calculation. And he took it to the customer showed the customer that even though Maurice price was higher, csio was lower. And I got a letter from Tony, saying that was the key to winning a 66 $0 million order.
Yeah, so for all the listeners out there, if if you’re fighting against imports for some kind of business, or trying to make the decision on your own part for your own company, use the TCL estimator, contact me ask for help. You know, my, my mission is to is to bring 5 million manufacturing jobs back, we count that we’ve brought back did that 5 million have come back? Not not all because of us. But 5 million, 1 million have come back out of the 5 million. I need another four. So this time for the phone to start ringing?
Damon Pistulka 36:27
Yeah. Well, that’s, that’s a you bring up a great point, though, for suppliers. If you’re if you’re, you know, if you’re supplying something to somebody, and you know, you’re in competition with an offshore manufacturer for those components of those products, that is a way for you to really differentiate yourself a from the offshore but other competitors, even in the United States, if you came in and were intelligently talked about the total cost of ownership.
Harry Moser 36:55
Now, we find a lot of recently, the last year or two, a lot of contract manufacturers and other small OEMs are starting to put on their website something like thinking of reshoring tired of long deliveries and quality issues tired of paying in advance of shipment, or etc. Oh, yeah, here’s, here’s what our company is doing to help you and, and it will often though, link them to our website to see things Yeah, but increasingly, companies are, are being aggressively going forward to to make the make the reshoring pitch to their, to their customers.
Yeah, another thing we offer, if the company is not having a lot of such opportunities, but knows that there’s a lot being imported. So if there’s a if a company makes widgets, you know, whatever it is, this could be contract manufacturing could be their own pumper motor or something. We have the import substitution program, and reshoring is substituting domestic for imports.
And so that the company fills out a form identifies the product that they’re really good at making. And then we tell them, we train them on using TCL as a sales tool. And we tell them who the biggest importers are of the product. They’re good at making, what tonnage they’re bringing in some idea of what they’re paying for it home, they’re buying it from offshore. And then the widget company uses the TCM argument to go to that importer to convince them to buy from the to the widget company instead. In a factory, give them the leads. And the tool. Yeah, to go out and get the business you know, so yeah.
Damon Pistulka 38:40
Yeah. Because your your interests are aligned. You’re trying to get more work and debate and manufacturing in the United States and they want more work for their businesses and working together only it’s it’s a smart thing to do. And good for the country. It’s good for the country. Yeah.
Harry Moser 38:54
And nothing going back to the skilled workforce. Just to tie that back in again. If you ask kids and guidance counselor, you know why why don’t why shouldn’t build go become a toolmaker welder? Well, you know, industry here, we had the factory in town, and it got shut down and everybody was unemployed and opioids, and, you know, it’s been a Yeah, up and down. Industry hasn’t been something stable.
So so the single best way to overcome that argument is in a given community or state to document all the cases of reshoring to let the guidance counselor and the parents and the kids see Hmm, that’s interesting. Works coming back from China for 440 6% of the reshoring from China. So work work isn’t going to China anymore is coming back from China. Yes, Suzy, you want to become a welder? Probably. That’s really a good idea. Now, once you become welders.
Damon Pistulka 39:46
Yeah. And it is happening more and more because as as the popularity of this ramped up, you know, the cost of wages and costs of manufacturing has gone up around the world. And it’s especially true Especially China,
Harry Moser 40:01
especially China, and you’re trying to try to for about 20 years, trying to average 10 to 15% annual wage increases, sake driven significantly by the fact that they had the the one child policy, which cut that cohort of people who I think 40 years old. And last, which is your solid metal, you know, the center of your, your working group, cut it in half, instead of having two kids or three kids, I had one kid. And so their their workforce is dropping at 3.4 million per year. And the demand for labor has been going up at six or 7% per year. So the price of labor goes up, and hey, that’s great for them. They’re middle class now. And it’s good for us, because now they’re not so damn competitive.
Damon Pistulka 40:50
Yeah, yeah. Well, I mean, it’s, it’s, it’s really noticeable. Now in the in the past projects. I mean, it was been, it’s been a number of years now, since I’ve been doing anything with offshore manufacturing, even five years ago, six years ago, seven years ago, I think it was, you know, it was the gap was narrowing. You mean, it really has to be a special kind of product for it to when you look at total cost of ownership to to make the sense
Harry Moser 41:15
that the counterbalancing thing, however, is that us productivity, manufacturing productivity, has increased an average of 1% per year for the last 12 years. Wow. Okay, Chinese productivity has increased an average of six or 7% per year, over that time period. There. So maybe half of that wage increase is eaten up by the productivity increase. So what you see over there, with the trillions of dollars, we’ve spent buying stuff from there, they’ve built these new factories with the newest equipment and the most robots and, and because they see shortages of their workforce, they’re automating, like hell.
And our factories too often are 50 years old, and you still see Bridgeport and whatever, yeah. And not enough robots and not enough loading, you know, automatic loading and so on. So, so, you know, our, where’s the Germans, they, they’ve continued to invest. So we need to be really, I always say we need to be trained, and do investment like the Germans and, and work as hard and aggressively as the Chinese. We do that we’re gonna be way back on top.
Damon Pistulka 42:33
Yeah. Yeah. But it’s just it’s, it’s mesmerizing, almost listen to you, because you, you know, this information. So well. And I know the people that are listening, we’ve got a bunch more comments that have been put on the screen that are great comments, and thanks, Gail, and candidates for can even than others that are there commenting, because you know, this is really important stuff. For manufacturers, this is important stuff for people that are looking to get into the job market. I mean, because there are there are opportunities in manufacturing, there are going to K be opportunities in manufacturing.
And I think as long as we have people who are thinking about it globally, and really understanding what the long term goals and plans should be for for business to be successful, you really have to you have to look at this business differently. And not not as we talked about earlier, just the you know, how much is that? How much is it costing and and on a piece price basis, like the example you gave with the the Eric aerospace part moving around, but really look at this total cost of ownership, and then figure out how can we get better, because if we, if we do that productivity, increase that little bit of difference here, there, we can make it as competitive as anywhere.
Harry Moser 43:52
And one other thing to think about is risk. And then there’s the Suez Canal risk, there’s the COVID ratio, things that mess you up for a couple of months and so on. But there’s, I’ve got a friend over there a top sinologists. So what China expert, Dr. Ayman McKinney, he’s written a bunch of bunch of stuff anybody can find him. And for, for about the last six months to a year, he’s been convinced that the Chinese are going to decouple from the US that because they’re so pissed off, because of Trump because of Taiwan, Hong Kong, the jaegers you know,
trade trade war in almost everything that they think that we’ve done to persecute them, just South China Sea is on and and that they are going to at some point in time, announce that China will not ship anything to you as the old completely cut us off, suffer all the contracts, shift anybody else, as long as somebody else doesn’t shoot cross ship to the US and can you imagine us now we With the 400 billion or whatever it is that we’re that we’re buying from China year, and in many cases, they’re the only source of the product in the world that we can get it from.
And, and, and us, like carbide and rare earth minerals, and you know, medical stuff. And if they just came out and said, you’re done, we’re never gonna ship you anything. Again, you’re on your own, you suck it up, we’d be devastated. Now, if that had happened 15 years ago, when they needed us to develop their economy, they needed our trillions of dollars of consumer expenditures, they would have just devastated them.
But now that we’ve allowed our manufacturing to hollow out so much, and we’re so specifically dependent on them. So I think that what’s the probability, I don’t know if it’s 1%, or it’s 5%, or 10%. But if it’s, if it’s measurable, anything like one 510 percent, then company should look at that and say, we’d be out of business. And our country would be devastated, you know, in our own interest in our national obligation, patriotism to the country, it’s at least worth doing the math and seeing if we can bring the work back now and be more profitable by doing so.
Damon Pistulka 46:15
And you make a great point, because look at what we’re living with today. I mean, today now, I don’t mean today, in last month, let’s just look at today, you know, I’ve got I’ve got friends of mine that are running factories, one of them they do they do truck up fitting, they build for just about every truck that you see pushing snow or doing something for government, they’ve probably had something to do with it.
And they’re getting trucks delivered that have no window controls, wiring harnesses not on well, and this is this is a lot of this is happening because there’s supply chain disruption that happened from COVID. Now that’s just COVID. That’s this is a different thing. And it’s reacting and all those kinds of things. But when you look at that a lot of and a lot of that is due to the the offshore interruptions.
But when you look at that, and you just think of these examples, and we saw how how, I don’t know weak isn’t the right word, but how dependent are dependent, our medical products were on the supply chain coming from China, and we’ve leaned out the supply because some people know the overall cost, we’ve leaned out the supply chain so much, and then had it coming from offshore that lien. When that was interrupted for not very long, we were left to truly scramble to try to figure out how to cover a short term kind of problem like that. I can only I can’t even fathom what would happen if the Chinese imports stopped for three months.
Harry Moser 47:54
I mean, penicillin. Oh, yeah. Yeah, mats, and gowns and gloves. Yeah, rare earth minerals. Like I have this theory, and it could be entirely wrong. But I have this theory that 1520 years ago, China and Russia got together, and, and the Russians continued to build up their military. And the Chinese task was to soften the US economically, you know, to undermine our manufacturing, so we couldn’t could not maintain our military capabilities, and so that our budget deficit would would boom, you know, hugely increase, which means we wouldn’t have the money to pay for the military. And so you’d have a an economically and militarily weaken us faced by China and Russia.
Did they ever agree to that? Or not? I don’t know. But it sure seems similar to what you actually see having happened because, because one interesting thing, the Chinese trade surplus with the US is approximately equal to their trade surplus with the world. So all the rest of the world, they’re roughly in balance in aggregate, and in the US, they have this huge trade surplus. So you look at that and say, looks to me, like they’re targeting the US and they’re preferentially helping their countries shipped to the US you’re more so than to Germany or Italy or anywhere else in the world. So
you don’t you
Damon Pistulka 49:21
don’t know but but it but it is, you know and reshoring these jobs to the US or even even if you’re if you’re not going to fully reshoring jobs at least have part of your supply chain dependent you know, getting product from a from a local resource or or research within the United States because then you’re not down for good and you’re good chance to come back. Yeah, yeah, just
Harry Moser 49:50
so we know we some people are talking about China plus one strategies, you know, continue to get your most different trying to get get some from India to Hey, okay, but what are the costs of having two sets of tooling, keeping them consistent, keeping the quality keep keeping everything working, in comparison to maybe a higher labor cost here, but having one source, five miles from your assembly plant, and you do all that math, and you put it all together, and many of the cases that us is going to turn out to be the right choice. Yeah, but when I’ve got my neighbor up here in Maine is Jim Womack, the lean guru. Yeah.
Okay. And he talks about Lean shoring, he says, when you bring it back, don’t put it in the same old factory with the same old equipment with the same people in the same bad habits. Put it, put it, put it with new equipment, preferably a new factory, train the people that get the lean flow, right, so you’re doing it, you know, as efficiently as you can, yeah, really train the people. And and when you do that, you’re going to find that an awful lot of what you bring back can be done economically here. So you can’t just do it the same old way, you have to do it better, cuz they’re doing it better over there all the time. So we have to do it better.
Damon Pistulka 51:06
Yeah, yeah, that’s, that’s for sure. And that’s a great point, I think, you know, we can’t continue to do things the way that we have. And, and obviously expect to get, you know, better results. We have to keep keep innovating and doing what we need to do to be better at it. And, and this means where we, where we source, how we do things and everything to look at that total cost of ownership and get that to be competitive with the rest of the world. So
Harry Moser 51:35
we work a lot with the the MEP s manufacturing extension partnership. Yeah, there’s some there’s one in every state. Yeah. And some of them offer our programs like the import substitution program to their constituent client companies in the state. So So if, if you like what I described this import substitution program, either contact me or or ask your local MEP if they’d be willing to get involved.
Damon Pistulka 52:02
Yeah, yeah, that’s, that’s cool. That’s cool, because the MEP is I think they’re the MEPs are some of the best kept secrets in the United States, because most people don’t even know about them. And they could use a lot of their resources if they just knew they were there. So that’s, that’s good that you guys are working on. So before before I forget, what is your website address for the reshoring initiative so people can make sure to do that and get that www
Harry Moser 52:27
dot reassure? now.org.
Damon Pistulka 52:31
Okay, okay. Be sure now.org
Harry Moser 52:33
reach out or you look up for showing initiative, you’ll find us anywhere we share now.org and if you if I can be of help, it’s Harry dot Moser at resharper. now.org. Okay, just gave me all busy, Harry, I heard you, uh, Damon, you’re crazy. Oh, okay. Or Harry, I’ve got I’ve got an opera, I did reassure I want to tell you about our success. And I’ll make you famous, or, or we have an opportunity to reassure we need your help.
Damon Pistulka 53:01
Yeah. So that that’s a great point. So if you if someone’s listening, and they want to look at reshoring need help reassuring your contract manufacturer, you’re trying to get some business back here, you’re competing against an offshore resource, the reshoring initiative is a great place to start. And and Harry can help you there. And again, it’s reassure now.org. And before we get off, you know, what, what are some of the, the key things that you think are going to hit us as manufacturers United States the next few years,
Harry Moser 53:41
you want the good things, the bad things?
Damon Pistulka 53:43
Let’s start with the bad things because I know the good things are going to be good.
Harry Moser 53:47
But at the risk of being political. I’m not in favor of a higher corporate income tax rate. And because that’s that, that reduces the after tax return on investment of having a factory in the US. I think that that’s, that’s a negative. The President is pushing. He keeps saying we need your millions more good union jobs in the United States. And, you know, there there are a few unions that have been very proactive and get lean where they’re coming to, and some of us have been great. But but the overall history is, is not consistent with increasing competitiveness. And, and so so, you know, mandate for more unions is not consistent with bringing manufacturing jobs back to the UI.
So in my opinion, I’d love to love to have the unions prove me wrong, but I’ve worked with two or three of them in the past. I’m happy to work with them again, to help them convince their companies to reassure and bring the work back so a lot more jobs so happy, I’m happy to work with them. minimum wage, you know, no, everybody’s paying above the minimum wage now anyway, so it’s almost irrelevant that But, but but I’m afraid if that happens, someone’s going to want to raise it to $25 an hour.
And there’s some point there where it does raise our costs too much. And it. It used to be your head to go. If you wanted to get ahead, you had to go into an apprenticeship or you had to go into manufacturing instead of Starbucks. But if you can make $25 at Starbucks, then why would you? Why would you bother? JANET? treasurer, treasurer, Yellen keeps talking about wanting a strong dollar. And and one of the biggest problems we’ve had in the past has been that the dollar is consistently overvalued by 20, or 30%, which is what is the driving factor in our trade deficit?
So so I think I happy had more haffley here say, I want $1 that stable at a lower level? Yeah, but she’s afraid to say that because the currency markets themselves, yeah, but but it’s clearly clearly the right thing to do, if you want to bring the jobs back, because companies, if the companies see 30, and 40%, price differences, you know, they’re, they’re not gonna listen to me, they’re gonna listen to the accountant, and they’re going to go and buy cheap.
And so makes makes my job and David’s job harder by keeping the dollar word as does as the bad they some of the good things. I liked the emphasis on the supply chain, the willingness to tax people for offshoring, and reward them for reshoring. I one concern I have though, like a lot of the emphasis recently has been on, for example, chips, and there’s talks of 10s of billions of dollars, invest in the chip factory, I think you have to do it, because if you fall too far behind in that your history, your chance.
But right now, we’re at risk of being dependent on Taiwan and China to get our chips. Yeah, and if if we don’t get the dollar down, and bring back the production of cell phones, and computers, and servers, and infotainment systems, on cars, and all this kind of stuff, like you were talking about, if we don’t bring that back here, then we and we build five or six new chip foundries, and they have all this extra output that’s coming out, then we’re gonna have to sell them to China, to make those products that we then buy back.
So instead of being dependent on China, for chips, we’re going to be dependent on China for a market for our chips. And therefore, I think, I think doing the chip foundries is the right thing to do. But at the same time, we should get the dollar down so that the production of the end product comes back. So there’ll be a market here for the chips that we make.
Damon Pistulka 57:40
But it’s again, it’s it is to help remove the remove some of the risk in our, in our supply chains. I mean it when you think about the the risk of that that induces it’s it’s pretty scary, actually.
Harry Moser 57:55
Combination of trying to end Taiwan together. Yeah. Because China is committed to taking back Taiwan. And if they take it back then I don’t know whatever it is. 60 70% of the chips are being paid in China.
Damon Pistulka 58:09
Yeah. Yeah. All right. Well, this I tell you what, Harry, this has been such a great conversation with you because it is it is all of these things where I’m looking at, we’re about an hour now. And we probably should, should should wind it up. But I sometimes like to come back and talk about some of these things that specific but I’ve just want to let everyone know. Today’s guests, we got Harry Mosher from the reshoring initiative, reassure now.org. And it’s Harry dot Moser at reassure now.org.
If you want to talk about reshoring, total cost of ownership, and other things like that. Thank you so much, Harry, that I don’t know how to say it is such a pleasure to see we went on a couple of shows like this. And I just I enjoyed every time because you are a wealth of knowledge around this. You understand this at a at least a national and more of a global level than just about anybody that I talked to. And it’s it’s refreshing to to be talking to you right now. So thanks so much for being here day.
Harry Moser 59:15
Thanks for having me. And thanks to everybody who’s out there.
Damon Pistulka 59:17
You bet. We’ll be back again on Thursday with another guest on the faces of business. But thanks so much today to Harry. And remember once again, I’m gonna say it again. The reshoring initiative resharper now.org are harried at Moser at reshoring now.org. And you can get some questions answered about how you can reassure some of your manufacturing jobs in the United States. Thanks a lot, everyone. Bye bye
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