When Walmart pledged last year to buy an extra $50 billion in U.S.-made goods over the next decade, it appeared to give reshoring initiatives a shot in the arm—and it may still do so. After all, the company did host a U.S. Manufacturing Summit, which brought together representatives from 500 supplier companies, 32 state governments, major retail industry leaders and other retailers.
But as has been noted, reshoring initiates may not always go smoothly. Suppliers trying to reshore production face a number of challenges, including a shallow pool of component suppliers, a sometimes inexperienced workforce, and other obstacles.
“A lot of the tribal knowledge and skill sets are gone because the humans who used to do that work have either retired or died,” says H. Kim Kelley, CEO of Hampton Products International, in a recent Reuters story. The maker of locks, lighting and other household hardware began selling products made in Asia to Walmart in the 1990s, and is now supplying it with some U.S.-made products. Trying to rebuild that manufacturing capability, while making products that meet Walmart’s standards, can require companies to “start from scratch,” Kelley says.
Cindi Marsiglio, the Walmart vice president overseeing the U.S. sourcing push, says the retailer and its existing suppliers have 150 active reshoring projects in various stages of development. However, finding U.S.-made component parts has emerged as an on-going problem for all too many companies. For example, Hampton, which also makes tow straps, tie-downs and bungee cords for the automotive market, had a difficult time locating a U.S. maker of lightweight but strong polyester yarn. Other suppliers complain of difficulty finding small motors, as well as plastic injection molding equipment and computerized cut-and-sew tools, Marsiglio says in the Reuters article.
The issue is so widespread that Walmart is making it the focus of the company’s 2014 U.S. Manufacturing Summit this August in Denver. The company’s plan is to offer an opportunity for meetings between suppliers and raw material and component providers. Walmart also says it’s especially interested in having factory owners with excess capacity attend the event—even those that aren’t interested in supplying Walmart directly—in the hope that they can become contract manufacturers to Walmart suppliers looking to produce in the U.S.
In the meantime, Walmart will also host what it calls a Made in USA “Open Call” event this July at its Bentonville, Ark., home office to focus on new business development. Current suppliers that wish to present new categories will be featured alongside suppliers with U.S. manufacturing capabilities who aren’t currently doing business with Walmart.
Factors such as lower domestic energy prices, increasingly competitive wage rates paired with improved product quality, more control over the supply chain, and the ability to ship and deliver quickly to meet shifting U.S. customer demands are certainly appealing. At the same time, depending on industry, many companies’ long-term growth opportunities still lay in Asia, Latin America, Africa and other countries. Still, a case often can be made for reshoring at least some manufacturing—or at least considering the option.
If your company has—or is—reshoring production or some of it, what problems have been encountered? Will initiatives and forums such as those Walmart is sponsoring help?