by Elizabeth Hines | Mar 14, 2016 | Blog, Strategy, Supply Chain
There is no easy answer to the burning question why the onshoring movement refuses to truly take off.
The issue of onshoring is frequently painted in black and white. While the media often likens the return of companies to the United States from overseas to a stampede, skeptics may be too quick to downplay the positive impact of the recent movement in manufacturing.
Nevertheless, those who were looking for a true Renaissance of American manufacturing have reason, at least so far, to be disappointed. Even among some high-profile companies — most notably Apple and GE — that announced their return with great fanfare, reality has set in. GE has battled high turnover rates at its re-opened Kentucky plants, as workers reportedly refused to perform certain tasks, while Apple has been stumped by the shortage of engineers.
Although the number of companies bringing production back home has risen significantly in recent years — from 64 in 2011 to 300 in 2014 — they are still outnumbered by those going in the opposite direction.
However, the issue is more complex than net gains or losses. According to new research by Morris Cohen, a Wharton School professor of operations and information management, and Hau L. Lee at Stanford University, “There is an unprecedented amount of restructuring going on.” In some cases, departments within the same company are onshoring and outsourcing at the same time, each weighing the perceived pros and cons differently.
In a Knowledge@Wharton interview, Cohen elaborated on the trend: “I’m going to go to China. I’m coming back from China. The same company simultaneously is making what seemed to be opposing decisions. And when you asked them why, they would give the same reasons. It’s because of labor costs. It’s because of market access. It’s because of this and that.”
In fact, they found there appears to be no dominant reason why companies make one decision or another in favor of onshoring or staying put.
And barriers seem to remain the same as when the onshoring movement began to gain momentum: The lack of skilled workers, coupled with an aging workforce, still rank high on the list of negatives. The rapid pace of offshoring in 1990s and early 2000s made younger generations lose faith in the viability of a manufacturing career.
Patrick Van den Bossche, the Americas lead partner at A.T. Kearney’s Strategic Operations Practice — which released its inaugural Reshoring Index last year — explained the problem on Manufacturing.net: “Think about it — if you have a kid in school, with everything that happened in the last few years, with manufacturing moving overseas as fast as it did, would you feel comfortable to tell your kid to develop a career in manufacturing? I don’t think so.”
At the same time, countries like China, Brazil, and Eastern Europe, previously known for their low-skilled labor, are quickly improving and investing in high-tech industries. With a greater pool of skilled workers abroad, a move back to the United States will seem less urgent. And with the arrival of robotics, the issue of labor costs will likely take on even less significance.
So the big question is, how should the United States stand up to the competition? What do you think?
A version of this article previously appeared on EBN Online.
by Elizabeth Hines | Mar 10, 2016 | Blog, Manufacturing & Distribution, Strategy, Supply Chain, Talent
Manufacturing could offer a career with upward potential for STEM students at low-profile colleges.
The college graduates of 2015 were the most indebted ever — until the next round of grads wave their diplomas in the spring. But is sinking deep into debt really the ticket to a great career? If you have the means (and brains) to invest in an Ivy League degree, all stats seem to indicate you get ample payback for the $200,000-plus expense.
But among those high school grads who may not qualify for generous financial aid packages and at the same time cannot afford — or even want — an Ivy League degree, there are still lucrative options, especially if they study science, technology, engineering, and math (STEM).
The skills gap in U.S. manufacturing, for example, is well known. While as many as 60% to 70% of executives say their current employees lack sufficient skills in technology, computer, and math, the problem is exacerbated by the lack of qualified job prospects — an expected 2 million manufacturing jobs will go unfilled due to the talent gap during the next decade, according to a Deloitte study.
As I’ve said before, herein lies opportunity. There is no reason seeking a career in manufacturing should break the bank if students weigh their choices wisely. Picking a low-profile school may “pay off big both in terms of getting a good job and salary,”according to John Walsik, a Forbes contributor and author of The Debt-Free Degree.
The opportunity is best illustrated by Business Insider’s recent list of underrated colleges in America in which the US News and World Report’s rankings of the best universities was compared with PayScale’s 2015-2016 College Salary Report. Rather than pursuing degrees from the highest rated schools, high school grads should also consider schools that, although ranked relatively low on the US News list, yield high mid-career salaries.
Interestingly, Missouri University of Science and Technology, New Jersey Institute of Technology, and University of Massachusetts at Lowell, known for their science and engineering programs, all ranked in the top 5 (Pace University in New York City topped the list), with mid-career median salaries ranging from $94,700 to $102,000. Within six months of graduation, for example, 80% of New Jersey Institute of Technology graduates were either employed — top employers include IBM and ExxonMobil — or enrolled in graduate programs.
A college degree from a prestigious school means little unless your earnings quickly make it worthwhile. If only manufacturing could shake its lackluster reputation, a growing number of students may discover it holds the key to a career with a lot of upward potential — without necessarily going into big debt.
What is your take on the cost of college versus the payoff?
A version of this post previously appeared at EBN Online.
by Elizabeth Hines | Feb 29, 2016 | Blog, Manufacturing & Distribution, Strategy, Supply Chain
As companies “tiptoe” back to the United States from overseas, the “Made in USA” label should grow more common. However, ambiguous rules are costing some manufacturers hundreds of thousands of dollars in penalties and legal fees. So what’s the problem? The coveted “Made in USA” does not always mean the same thing to companies as to the Federal Trade Commission.
Although most cases stem from California, where every single component must be sourced domestically to earn the right to be advertised as American-made, the ambiguity of FTC’s rules is likely to bring more lawsuits nationwide. FTC rules state the “Made in USA” label can only go on goods that are “all or virtually all” made in the United States. But how should companies interpret “virtually?”
The latest to be slapped with a list of reprimands by the FTC is none other than Walmart, which recently was asked to not only remove “Made in USA” logos from all product listings, but also the country-of-origin information from all product specifications (unless required by law) and U.S.-origin claims that appear in product descriptions or titles. Walmart is also required to clear advertisement copy submitted by suppliers of any USA-origin claims.
A giant like Walmart can certainly handle adjustments to its Investing in America Jobs Program — redesigned logos will now disclose the percentage of U.S. content in the product — and transparency is obviously fundamentally important in sourcing and product advertisements. But the fact still remains: Companies can only guess what qualifies as U.S.-made. As reported by Supply Chain Digest, some have taken it upon themselves to include 70 percent of domestically made components before making any “Made in USA” claims.
The dysfunction is perhaps best illustrated by the case of Lifetime Products, whose basketball hoops ended up in the spotlight last fall when two consumer lawsuits claimed they were falsely labeled. Although the hoops are, to quote the Wall Street Journal, “made of parts that are almost entirely cut, shaped, painted and assembled” at the company’s sprawling Utah factory, some bolts and the net were imported from China. The costs were staggering, with the legal fees alone adding up to $535,000, and the plaintiff’s attorney’s receiving $485,000.
Sourcing every single component domestically is no easy feat, especially for companies that just returned production from overseas and want to capitalize on the move with the “Made in USA” label. After so many years of outsourcing, it will take time to rebuild the U.S. supplier base as well as upgrading aging manufacturing equipment to meet today’s demand for speed and agility.
Lasko Products Inc., a family-owned company based in West Chester, Pa., is one example of a producer that can no longer find domestic suppliers of small electric motors. The company’s electric fans are sold at Walmart, which has discovered the effort to buy more U.S.-made products has proved particularly difficult when it comes to electrical devices.
Let’s hope the FTC can at least clarify the rules.
What do you think is a reasonable definition of “Made in USA?”
A version of this article was previously published on EBN Online.
by Elizabeth Hines | Oct 12, 2015 | Blog, Logistics, Strategy, Supply Chain
There are organizations that sell products and there are organizations that sell solutions. To be sure, both can be successful as long as products are being sold as products and solutions like solutions. The difference is that the product sale is really a commodity sale. Commodities come with an “each” price or a “per pound” pricing matrix, etc. It usually is a short or shortened sales cycle and negotiations revolve around the total price and your typical supplier performance metrics. The solution sale is much different. This sale is one that requires client discovery, isolation of unique client pain points (that only your solution can address effectively), and being able to drive distinct value for the client, and in turn, for your organization. This sales effort is highly specialized and requires selling time (sales cycle) that is much more detailed than a product sale. That being the case, you need to be sure that your close rates are high enough to justify the work load and sales cycle needed. You also need to be sure that the deals you close have a deal size that reflect the sales effort and cycle time (said another way, is the deal worth winning?)
If your sales team thrives on creating value for their customers far beyond ‘supplying’ their ‘product’ at the best price, check out our other solution selling tips below.
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
by Elizabeth Hines | Oct 8, 2015 | Blog, Strategy, Talent
Hiring someone who says he or she is not a team player sounds like a risky proposition, right? Few employers are, after all, searching for renegade employees or stubborn loners who refuse to interact with co-workers. But what if it actually turned out to be a good strategy? Researchers at the University of Tuebingen set out to examine the effects on applicant pools by stressing the need for teamwork in job ads. The conclusion of the study puts it like this: “Given the evidence of a possible downside, it is recommended that firms should never look for team players just because ‘everyone else is doing so.'”
The study analyzed survey data from 1,300 college students who had been asked to evaluate a number of job postings that outlined various requirements, including whether the applicant should be a team player or an independent task-oriented self-starter. Interestingly, what researchers found was that although the ads did indeed attract applicants who considered their teamwork skills to be a primary asset, they also discouraged people whose qualifications matched the job description with the exception of one criterion: social skills. As a result, the employer missed out on technically skilled or task-oriented candidates who took themselves out of the running before the race even began. The study went on:
“…considering that organizations always need employees with high task-related skills, but that they may not always need team players, they should carefully consider when the requirement for teamwork skills is listed in their job advertisements—because there is a downside to looking for team players.”
For organizations that truly need employees with an aptitude for collegial collaboration, the study shows ads that stress the importance of possessing teamwork skills do what they were intended to accomplish. But in other cases, where teamwork takes a backseat to specific talents or technical skills, the employer is likely to end up with a smaller pool of applicants than if that routine phrase had been left out of the job requirements.
People who don’t cite social acumen among their list of skills may not thrive at “water-cooler conversations” or rush to plan the next company outing, but they know how to get the job done and they do it well. If teamwork is irrelevant to their job description, isn’t that all we really need?
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
