These days, 100 percent of the Single collection is produced in the United States with the exception of a few labor-intensive items in the Holiday collections, such as beaded dresses made in India. And the move has paid off—particularly among Single’s international retailers.“We have a lot of Canadian customers who are very interested in the fact that the product is made in the USA,” Sobolev said. “And we have a lot of European customers. In Belgium and Germany, they are very adamant. If the whole collection is made in USA, they triple their orders.”
Domestic manufacturing has allowed the company to fill reorders when a style suddenly takes off for a retailer. “Our edge is the fact that we can turn goods in two to three weeks, which nobody in China can do,” Sobolev said. “For clients such as some of the onliners, they can chase business.”
That was the case recently for one retailer that purchased a few stock inventory pieces from a previous collection to sell online. The retailer bought 18 units of one dress style—“That’s all we had in stock,” Sobolev said—and oversold it by 390 units. Fortunately, Sobolev was able to secure the fabric from the original local vendor and quickly put the reorder into production.
“From the day of the order to the day it [left] our door it was 11 days. And we just got another reorder from them for, I think, 460 pieces of the same dress,” she said.
Neiman Marcus’ Cusp department had a similar situation with Single’s “Janessa” jumpsuit, Sobolev said.
“They had an 83 percent sell-through, and they even sold out of it online,” she said. “We were able to do a quick reorder for them for 60 or 80 units. Just the fact that we can do this so quickly and they’re able to reorder, it’s very exciting for them. This is the kind of edge domestic manufacturing allows us.”
Spread The Word
Every piece in the Single collection has a label that reads “Single Los Angeles.” Each item has a hangtag that reads “Made in USA,” although Sobolev said she’s planning to change that to read “Proudly Made in USA.” The linesheets, lookbook and website will also soon have “Made in USA” prominently displayed. At the Single showroom in Atlanta, the sales staff display signs that read “This Collection Is Made in USA.”
“The buyers get very excited when they find out that the collection is Made in USA—especially in our Midwest territories and in the South and Southeast,” Sobolev said. “At the regional markets, it’s the first thing my sales team tells every buyer that walks in.”
Sobolev frequently attends the regional markets in Dallas and Atlanta, as well as the New York Market five times per year.
“In New York, nobody cares where things are made, honestly. It’s all about the price,” she said. “I’m getting the most support for made in USA from Texas, from Louisiana, from specialty stores in the Carolinas.”
Much of the Single collection is made using European fabrics, but Sobolev looks for domestic resources, as well. “We have one lace that we have been running for about 10 years now. It’s a very vital part of our Holiday collections,” she said. “It’s made in this little factory in New Jersey. The machine itself is about 200 years old [and] imported from England. And it’s a beautiful re-embroidered lace. It looks like [a high-end Italian] lace, but it’s a lace that can be worked into our contemporary price points.”
Sobolev said some retailers ask if the company will source a style overseas to reduce the price.
“Of course, everyone is price-sensitive these days,” she said. “But sometimes we have to put our foot down and say, ‘Sorry, we can’t make it at that price. However, we can do it at this price, and you can have a product in your store that says ‘Made in USA.’”
California Sportswear
Founded in 1994, Single sells in higher-end department stores such as Saks Fifth Avenue and Neiman Marcus, as well as higher-end specialty stores and boutiques around the world such as Tootsies in Texas, Montmartre in New York and Mendocino and Want in Canada. Although the company started as a sportswear maker, over the years it became well known as a dress resource. For Fall, Sobolev is returning to the brand’s sportswear roots with a collection of luxe separates Sobolev calls “California dress-up casual.”
“If you look at the way people are dressing today, it’s a lot easier for a girl when she’s going on a date to run in and buy two new blouses to wear with her favorite leather legging or skinny jean,” she said. “Unless she needs a dress for a specific occasion, I’m seeing more of a turn to an easy, casual kind of dressed-up sportswear. It doesn’t mean we’re not doing dresses anymore. There’s still two or three dresses in every group, and we still have
our assortment for our customers that are very much into dressing that career gal.”
Private-label businessIn addition to Single, the company has a strong private-label business manufacturing for a handful of brands and retailers.
The company also produces exclusive Single collections for retailers such as the White Single Dress label, which sells at Rue La La.
“We do thousands of structured dresses for Boston Proper, and we have for the last 15 years,” Sobolev said. “That’s the beauty of being able to turn a 600-unit reorder in three to five weeks domestically.”
The Sobolevs’ private-label business has grown organically as word gets out that the company is a resource for brands looking for domestic production. “We have become kind of like the Intelof the fashion community,” Sobolev said. “[People will say,] ‘You want to make something domestically? Call the people at Single. They can turn things in two to three weeks.’”
New Brand Extensions
The company recently added plus sizes for Saks and has since expanded the offering to other retailers, such as e-tailer Madison Plus. Although still in the early stages, the plus-size capsule collection fills a void in the contemporary market for plus sizes.
“There aren’t a lot of choices for the [contemporary plus-size] consumer,” Sobolev said. “We really invested in developing the blocks, and we got a great fit model.”
Sobolev hopes to expand Single’s plus-size offerings into a stand-alone collection.
“I would love to turn this into more of a proper business—have it not just be a small capsule segment but really expand it on various levels,” she said.
Another new concept in the works is the Single men’s underwear line developed by the Sobolevs’ 24-year-old son, Julian. Still in the test stages, the collection features the Single name and an American flag on the elastic waistband.
Just as Single is committed to domestic production, Galina Sobolev said she wishes more manufacturers and retailers would commit to Made in America product. Retailers, in particular, could highlight American-made products in their stores, she said.
“Why not have a section for Made in USA?” she said. “The manufacturers today have a responsibility—we all, as Americans, have a responsibility—to this country and the security of its economy and the future for our children.”
“MADE IN USA” CLAIMS TRICKY FOR RECYCLED MATERIALS
in Made in USA, Manufacturing & Sourcing, Recycling, SustainabilityManufacturers of products made with recycled materials can’t claim offerings were “Made In USA” unless they can show that the materials originated domestically, according to the Federal Trade Commission (FTC) making it the “Made in USA” claims tricky for recycled materials. Read more
Give American This Season
in American Made, Made in USA, Small BusinessIt’s time for America’s annual holiday study of contrasts.
First comes Thanksgiving, a heritage slightly scarred by glitzy parades, football, turkey fryer incidents, and overeating, but still imbued with volunteerism, thankfulness, and family.
Then comes Black Friday. Read more
Thankful for a Made in USA Thanksgiving
in American MadePhoto Credit: Kat Mulkey via Flickr
by Alliance for American Manufacturing
Get to the stores before it’s all gobbled up. Read more
Ford Adding 850 New Jobs To Build 2015 F-150
in American Made, Automotive, Jobs, ManufacturingFord Adding 850 New Jobs To Build 2015 F-150. Ford announced today it will add 850 new jobs in Dearborn to build the all-new 2015 F-150 pickup that is the automaker’s most advanced pickup in 66 years.
The new hires will be sprinkled among the various facilities that make up the Ford Rouge Center in Dearborn. About 500 of the jobs will be at the Dearborn Truck Plant that assembles the pickup with three crews rotating over two shifts each day. Nearly 300 workers are for Dearborn Stamping and more than 50 will work at Dearborn Diversified, which also does stamping.
Total employment at the Rouge complex will be more than 5,500 with the latest hires and almost 5,000 will be hourly workers.
Ford is not taking new applications. The automaker has identified the new hires from its large pile of applications, and some have already begun training. All will be clocking in over the next couple months.
“This is one of the proudest moments I have had in my life,” said Jimmy Settles, head of the Ford department of the UAW, and a third-generation Rouge complex worker.
The $2 billion spent to revitalize the Rouge complex that consists of five plants makes it possible to do things never before done in the auto industry, said Bruce Hettle, vice president of North America manufacturing, at an event this morning announcing the additional employees.
The Dearborn Truck Plant just finished gutting and rebuilding its body shop to make the 2015 model with an aluminum body instead of the steel bodies used since 1948. Pre-production models are running through the body shop now and are scheduled to run down the full line starting Oct. 20, but that date might be moved up to this week.
The carefully orchestrated launch is on track, said Joe Hinrichs, Ford president of the Americas. Production vehicles will start “in a matter of weeks,” but Hinrichs would not say when Job One will be. Trucks will start arriving in showrooms by the end of the year.
Ford Adding 850 New Jobs To Build 2015 F-150
The plant runs with three crews but more workers are needed because this next-generation pickup has more features and technology. And building a body from aluminum instead of steel requires all new processes — such as adhesives instead of welding — as well as new manufacturing equipment.
Additionally, some of the stamping work has been brought to the complex, work that had been done by suppliers or other Ford facilities, said Bernie Ricke, president of UAW Local 600, who is pleased with the additional jobs.
Ford has pledged to quickly get production up to full speed because of the sheer volume and importance of the truck. Ford sold 763,400 F-Series last year and analyst Adam Jonas of Morgan Stanley estimates Ford’s trucks generate more than 90% of the automaker’s global auto profits.
Ford built up its inventory of outgoing 2014 models to bridge the gap until there are enough 2015 models to satisfy dealers. That will take a while because just as Dearborn Truck hits its production stride, the Kansas City plant in Claycomo, Mo., will go down for six weeks in the first quarter of 2015 to rebuild its body shop to switch to the new truck.
Jonas has written a number of reports expressing concern about the impact of the changeover on Ford’s profitability, but Hinrichs said today the launch is going according to plan, processes are being validated and people are being trained. In the end, Wall Street will be won over by the vehicle itself, he said of the truck that sheds 700 pounds, which will improve its fuel economy.
As part of the national contract negotiated with the UAW in 2011, Ford pledged to create 12,000 hourly jobs in the U.S. by 2015. The automaker has already exceeded that commitment: Last month’s announcement of a second shift of 1,200 workers at the Kansas City plant to make the Transit commercial van brought the total to more than 14,000. More than 3,000 have been added in 2014. Factoring in salaried workers as well, Ford has hired more than 23,000 employees since 2011.
The signs of health are not going unnoticed by the UAW, which has a new contract to negotiate next year.
“It’s always nicer negotiating with a company making lots of money than a company in distress,” Ricke said. Priorities for a new contract in 2015 include economic gains, looking after retirees and continued investment in jobs, he said.
“Ford’s announcement is more positive news for the citizens of Michigan and a further sign of the comeback of Michigan, manufacturing and the auto industry,” said Michigan Gov. Rick Snyder in a release.
Ford will have added almost 5,000 jobs in southeastern Michigan since 2011 including:
■ 850 at Ford Rouge Center including the Dearborn Truck Plant
■ 1,800 at Michigan Assembly Plant
■ 1,700 at Flat Rock Assembly Plant
■ 250 at Rawsonville Plant
■ 240 at Van Dyke Transmission Plant
■ 150 at Livonia Transmission Plant
SOURCE: Detroit Free Press
Jobs are slowly making their way back into the U.S.A. Do you see this happening in your area? Let us know your thoughts in the comments below.
Bravo Recalls Pet Foods Possible Salmonella Health Risk
in Pet Food, Products, RecallsSeptember 26, 2014 – (Manchester, CT) Bravo of Manchester, CT recalls select lots of Bravo Turkey and Chicken pet foods for dogs and cats because they have the potential to be contaminated with Salmonella. Salmonella can affect animals eating the products and there is risk to humans from handling contaminated pet products, especially if they have not thoroughly washed their hands after having contact with the products or any surfaces exposed to these products.
Healthy people infected with Salmonella should monitor themselves for some or all of the following symptoms: nausea, vomiting, diarrhea or bloody diarrhea, abdominal cramping and fever. Salmonella can result in more serious ailments, including arterial infections, endocarditis, arthritis, muscle pain, eye irritation, and urinary tract symptoms. Consumers exhibiting these signs after having contact with this product should contact their healthcare providers.
Bravo Recalls Pet Foods Possible Salmonella Health Risk
Pets with Salmonella infections may be lethargic and have diarrhea or bloody diarrhea, fever, and vomiting. Some pets will have only decreased appetite, fever and abdominal pain. Infected but otherwise healthy pets can be carriers and infect other animals or humans. If your pet has consumed the recalled product and has these symptoms, please contact your veterinarian.
The recalled product was distributed nationwide beginning on November 14, 2013 to distributors, retail stores, internet retailers and directly to consumers. The product can be identified by the batch ID code (best used by date) printed on the side of the plastic tube.
1) Bravo pet foods products recalled because of possible salmonella health risk.
RAW FOOD DIET BRAVO! TURKEY BLEND FOR DOGS AND CATS
Product Number: 31-102
Size: 2 lb. (32 OZ) plastic tubes
Best used by date: 11-05-15
UPC: 829546311025
Keep Frozen
Bravo! Blends All Natural Chicken Blend diet for dogs & cats
Product Number: 21-102
Size: 2 lb. (32 OZ) plastic tubes
Best used by date: 08-11-16
UPC: 829546211028
Keep Frozen
2) These products are being recalled out of an abundance of caution because they were manufactured in the same manufacturing facility or on the same day as products that tested positive.
Premium Turkey Formula BRAVO Balance RAW DIET
Product Number: 31-405
Size: 5 lb. (80 OZ) 2.3KG plastic tubes
Best used by date: 11-05-15
UPC: 829546314057
Keep Frozen
Bravo! Blends All Natural Chicken Blend diet for dogs & cats
Product Number: 21-105
Size: 5 lb. (80 OZ) 2.3KG plastic tubes
Best used by date: 08-11-16
UPC: 829546211059
Keep Frozen
Bravo Recalls Pet Foods Possible Salmonella Health Risk
The recall was initiated after routine testing by the Nebraska Department of Agriculture revealed the presence of Salmonella in two lots of product. This batch tested negative by a third party independent laboratory prior to release for distribution to consumers.
No additional products affected by this recall. The company has received no reports of illness in either people or animals associated with these products to date.
In addition to the voluntary recall of the above products, Bravo has chosen to voluntarily withdraw the following poultry products from the marketplace to provide its customers with the certainty of safety. Those products include all sizes (2 lb., 5 lb. and 10 lb.) of Bravo Chicken Blend(s), Bravo Turkey Blend(s), Bravo Balance Chicken Balance and Bravo Balance Premium Turkey Formula frozen raw diet products with best used by dates between June 20, 2016 and September 18, 2016. This is being done out of an abundance of caution despite no evidence of any manufacturing defect or distribution problem. None of these products are known to have tested positive for the presence of pathogens. This market withdrawal has NOT been requested by the FDA, but is being done voluntarily by Bravo.
The recalled product should not be sold or fed to pets. Pet owners who have the affected product at home should dispose of this product in a safe manner (example, a securely covered trash receptacle). Customers who have purchased the recalled pet food can return to the store where purchased and submit the Product Recall Claim Form available on the Bravo website www.bravopetfoods.com
for a full refund or store credit. More information on the Bravo recall can also be found a www.bravopetfoods.com
, or call toll free (866) 922-9222 Monday through Friday 9:00 am to 5:00 pm (EST).
SOURCE: FDA
New Balance Shoe: Materials Aren’t All Made in USA
in Made in USA, Manufacturing, ProductsThe assembly line at a New Balance factory in Boston in 2012. Associated Press
New Balance—the iconic U.S. sneaker maker—has long marched to its own drummer on “Made in USA” labels. Read more
Lincoln Logs to be ‘Made in USA’ Again Creating Jobs in the Process
in Jobs, Made in USA, Manufacturing, Reshoring, ToysLincoln Logs, the popular building toy created nearly a century ago by a son of architect Frank Lloyd Wright, is coming home to the U.S. Read more
Made in America: Why American Giant Didn’t Want to Build Factories in China
in American Made, Jobs, Manufacturing, Small BusinessAmerican Giant: Made in America.
With the prevalence of outsourcing factory work to Bangladesh and China, fewer retailers can use those three short words on popular clothing.
Read more
Is New Balance Making the U.S. Military’s Only Training Shoe?
in Jobs, Manufacturing, MilitaryTraining shoes, the last part of U.S. military uniforms that isn’t required to be 100 percent U.S.-made and -sourced, could soon go all-American. How New Balance could be set to profit.
Read more
Tesla Finds Home in Nevada
in American Made, Jobs, Manufacturing, SustainabilityElon Musk, co-founder and CEO of American electric vehicle manufacturer Tesla Motors.
CARSON CITY, Nev. (AP) — Tesla finds home in Nevada! Gov. Brian Sandoval announced Thursday that Nevada won a high-stakes battle with four other states for Tesla Motors’ coveted battery factory, but the win comes with a hefty price tag — up to $1.3 billion in tax breaks and other incentives over 20 years that state lawmakers still must approve.
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‘Made in America’ Not Easy For Retailers To Deliver-On
in American MadeAs the nation prepares to celebrate its 238th birthday, “Buy America” efforts are still going strong, though emotions on the subject tend to fluctuate depending on the state of the economy.But what about products, ranging from toothpicks to towels, with specific patriotic motifs? Or the U.S. flag itself? Should those products, which are marketed with an Uncle Sam sentiment in mind, be made in the United States?”It doesn’t really matter to me,” said Luis Rodriguez, a retired postal worker who last week sat on a picnic table in a Satellite Beach park wearing a postal carrier union T-shirt with the famed red-white-and-blue eagle — the Postal Service’s mascot.”What I do is make sure the correct number of stars and stripes are being used,” Rodriguez said. “If not, then I have more of a problem with it. But I’m not really too concerned about where it’s made.”
Vietnam War veteran and former Marine Corps infantryman Chip Hanson disagrees. He believes in a “buy American” philosophy. Patriotic items — including items that will be used in July Fourth parties this week — should be manufactured in the United States, he said. That includes plastic forks, paper plates and napkins.
“Most definitely it should come from our country,” he said. “If you look at what’s happening in our country, we’ve slipped into a situation where we are depending on other nations for our primary items.”
Retailers aren’t tone deaf to patriotic emotions when it comes to buying American. Wal-Mart, for example, pledged last year to buy $50 billion over a decade in American-made products.
Still last week, many of the products sold with patriotic themes were made in places such as the Dominican Republic and China. And how’s this for irony? Wal-Mart sells U.S. flags for $34.72 with the label on the packageproclaiming “Made in the USA.” However, a pole and bracket set sold along aside it are imported from China.
Thank some of the dichotomy to a global economy where cheap foreign labor and low-cost, offshore manufacturing practices make it more difficult for cost-conscious consumers to routinely purchase American-made products.
“People have become extremely price sensitive,” said Steve Kirn, executive director of the University of Florida’s Miller Center for Retailing Education and Research. “It’s hard to have these extremely low prices — and price is king right now for the vast majority of consumers — with low production costs coming from Asian countries, and now, African countries.”
That’s changing, somewhat, as labor costs in places like China rise, Kirn said. A number of U.S.-based textile and clothing manufacturers, for example, are seeing new life because it’s become more cost-effective to manufacture domestically.
“Some of the textile mills in the Carolinas are reopening, and I think there is an appeal to that for a variety of reasons,” he said. “You control the supply chain, you know what the raw materials are and you know what you’re getting. And you’re closer to the place where you’re ultimately going to vend it.”
Wherever you stand on the issue of prices versus patriotism, Florida “Buy American” advocate Roger Simmermaker said July Fourth is a good time for citizens to take stock about how they are spending their money whether they’re going to support jobs in the United States or outside the country.
“We have a Declaration of Independence, not a declaration of interdependence,” said Simmermaker, an author of two books on buying U.S. made products.
“Buying American is about more than just American-made products and U.S. jobs,” he said. “We’re less of an independent country to the extent that we rely on other nations to supply our wants and needs.”
‘Made in USA’ True Again
in American Made, Manufacturing & SourcingAlso beneficial to U.S. domestic user and consumer demand requirements are the rising costs incurred by labor and management in China, and to a lesser extent in other dynamic manufacturing sector nations such as Taiwan, Vietnam, India, Bangladesh and Indonesia.
This redounds to the benefit of America’s manufacturers, not only in shrinking costs, but lessening the need of huge advance orders to get the best price from foreign exporters. Also, the ability of domestic U.S. manufacturers through its distribution, to keep inventories current, without overburdening supply, definitely tilts the advantage increasingly to the domestic industrial manufacturing sector.
Although this obvious rebound of the U.S.A.’s industrial sector benefits the American economy as a whole, it probably will do little to alleviate the chronic unemployment, as tightening government regulations and advanced tech, plus increased use of part-time workers do not translate into a torrent of substantial additional production employees.
Morris R. Beschloss writes a regular blog at www.desertsun.com/beschloss and a column that can be found Sunday in The Desert Sun.
What do you think?
Do you agree or disagree with Morris Beschloss? Let us know via comments below.
New Manufacturing Plant in Blueridge, GA
in American Made, Products100% American Made Quality Since 1987
Sincerely
David & Todd Hall
Why U.S. Manufacturing Is Poised for a Comeback (Maybe)
in Manufacturing & SourcingThat’s the case made by the bulls, but plenty of skeptics argue that there are lots of reasons to doubt it. For all the positive trends and statistics, they cite numbers pointing the other way. And, the skeptics argue, the U.S. government needs to overhaul its policies and industry must invest more heavily before any real change can happen.
With that in mind, here are four reasons to bet on U.S. factories—and four reasons to be cautious.
THE OPTIMISTS’ CASE, PART 1: U.S. costs are getting more competitive
While wages soar at double-digit rates in China and some other emerging countries, they have stayed roughly level in the U.S. in recent years, narrowing the gap between America and Asia. Boston Consulting Group estimates that China’s overall manufacturing-cost advantage has shrunk to just 4%. When wages are adjusted for productivity and the costs of shipping and inventories are included, it can be more economical to make some products in the U.S. than in Asia.
Replicating those skills and supply chains in the U.S. is conceivable, but it would require many years of heavy investment. The big question is whether U.S. companies, which are typically focused on pleasing Wall Street with quarterly results, will make those long-term investments.
As for cheaper energy, sure, low-cost natural gas is spurring huge investment in some U.S. industries, such as petrochemicals and fertilizers. But energy costs aren’t the decisive factor for most manufacturers.
In an August 2013 survey of 216 U.S.-based manufacturing executives, Boston Consulting Group found that only 7% ranked energy costs as being among the most important factors in deciding whether to locate production in the U.S., behind factors like access to skilled labor.
THE OPTIMISTS’ CASE, PART 2: Companies are more eager to produce near their customers
Most companies still see their greatest long-term growth opportunities in Asia, Latin America and Africa, as hundreds of millions of poor people move up to the middle class. Emerging markets are likely to remain a higher investment priority than the slower-growing markets of North America and Europe.
don, Ontario, in 2012 after union members there refused to accept pay cuts of about 50%. Production moved to a new nonunion plant in Muncie, Ind.
THE REBUTTAL: The political climate still isn’t that great
The top federal income-tax rate for U.S. corporations, 35%, is the highest among major industrial countries. U.S. tax rules also give American firms an incentive to keep large amounts of cash invested overseas rather than at home.
Meanwhile, political gridlock in Washington leaves companies highly uncertain about future taxes, health-care costs and repairs to the nations’ crumbling roads, bridges and ports. Caterpillar says capacity constraints and outdated technology at U.S. ports have prompted it to use Canadian ports for about 40% of the company’s imports and exports.
THE OPTIMISTS’ CASE, PART 4: Foreign companies are betting on U.S. manufacturing
Germany’s BMW AG in March announced a $1 billion expansion of its car plant in Spartanburg, S.C., aimed at increasing production capacity 50%. Michelin of France last year opened a plant in South Carolina to make giant tires for earth-moving equipment. China’s Lenovo Group is making personal computers in North Carolina.
Even the U.S. footwear industry, after decades of decline, is showing signs of life. Merchant House International Ltd., headed by Hong Kong entrepreneur Loretta B.H. Lee, has been making work boots in China and selling them in the U.S. since the early 1980s. In May, the company started producing some of its boots at a new plant in Jefferson City, Tenn.
China remained the No. 1 destination for foreign direct investment in 2013, according to estimates from the Organization for Economic Cooperation and Development. But China’s total last year rose just 2% from a year earlier to $258.2 billion. The U.S. attracted $193.4 billion, up 16%, to rank No. 2.
THE REBUTTAL: The flow of jobs goes both ways
Harry Moser, president of the Reshoring Initiative, a nonprofit that encourages companies to consider bringing production back to the U.S., estimates that such moves are creating at least 40,000 U.S. jobs a year. But he says the number of jobs moving from the U.S. to other countries is probably around the same level.
Briggs & Stratton Corp. moved all its production of horizontal-shaft motors for portable generators from the U.S. to China last year. Todd Teske, the Milwaukee-based company’s chief executive officer, says production costs for that type of motor were lower in China. (Briggs still makes more than 85% of its motors in the U.S., a spokeswoman says.)
Critics also point to some other numbers that aren’t so rosy. Trade figures, for instance, don’t back up the idea that the U.S. has become much more competitive. U.S. manufacturing exports—excluding agricultural items, petroleum and coal—rose just 1.6% last year to $1.16 trillion, according to data from Global Trade Information Services Inc., a Geneva-based data provider. China’s manufacturing exports increased 7.7% to $2.06 trillion. Meanwhile, U.S. imports of manufactured goods also grew 1.6% last year, reaching $1.63 trillion.
Nor is there any sign of a U.S. factory-building boom. Daniel Meckstroth, chief economist at the Manufacturers Alliance for Productivity and Innovation, a research organization in Arlington, Va., says his analysis of government data shows that there are about 304,000 manufacturing plants in the U.S., down from 375,000 in 1998. The good news is that the number appears to be leveling off after a long fall.
Experts who are more sanguine about manufacturing say the statistics need to be put in context.
Boston Consulting Group’s Mr. Sirkin says the U.S. manufacturing recovery he sees is “just in the beginning stages” and should start improving the trade performance in 2015 and beyond.
As for factories, one reason the number isn’t rising is that the U.S. still has plenty of spare capacity at underused or vacant plants, says Mr. Moser of the Reshoring Initiative.
All in all, says Mr. Meckstroth of the Manufacturers Alliance, it is too early to say whether the U.S. will have a major recovery in manufacturing. “The potential is there,” he says, but the U.S. needs to do a lot more—including a more competitive tax code and better vocational training. He also thinks the U.S. needs to try to get other countries to reduce trade barriers and let their currencies float freely instead of keeping them artificially weak.
Mr. Hagerty is a Wall Street Journal news editor in Pittsburgh. He can be reached at bob.hagerty@wsj.com.
Why ‘Made in the USA’ is hard for Walmart to achieve
in Consumer Products, Economy, Jobs, Made in USA, Manufacturing, WalmartAn “Assembled in the USA” stamp is seen at the side of a box containing a 32-inch television set in the warehouse of Element Electronics, in Winnsboro, South Carolina. Element’s 315,000-square-foot plant in South Carolina has six assembly lines making 32- and 40-inch TVs that are now available in all of Walmart’s more than 4,000 U.S. Stores. REUTERS/Chris Keane
Walmart has pledged to buy an additional $250 billion in US-made products. But finding quality, low-cost US made goods is proving a challenge. How Walmart is acting as a catalyst for ‘Made in the USA’ manufacturing.
Read more
To Close the Skills Gap in Manufacturing Careers, Close the Gender Gap
in American Made, Jobs, Skills GapRead more
America's STEM Talent Pool Too Shallow to Meet Demand
in JobsThe U.S. News/Raytheon STEM Index shows that STEM employment in the United States has gone up by more than 30 percent, from 12.8 million STEM jobs (as defined by the U.S. government) in 2000 to 16.8 million in 2013, and a February report by Burning Glass Technologies indicated the STEM job market is actually far larger than that. Kelly also points out that the analytical reasoning and problem-solving skills associated with science, technology, engineering and mathematics are increasingly important for jobs that aren’t traditionally defined as being in STEM fields.
“People are measuring the number of Ph. D. engineers and scientists out there, but the mechanics putting the wings on the airplanes need STEM skill sets, too,” he says. “This is not simply an issue about guys with lab coats and pocket protectors. This is way beyond that.”
Launched with support from the Raytheon Company, the new U.S. News/Raytheon STEM Index measures annual changes in key indicators of STEM activity in the United States relative to the year 2000; it is not a comprehensive measure of all STEM economic or STEM education activity in the United States and does not determine whether explicit STEM goals are being met. The Index is made up of 93 sub-indices and thousands of data points divided into eight components: ACT math and science scores, Advance Placement (AP) test scores in STEM subjects, college and graduate degrees granted, U.S. employment in STEM fields, Program for International Student Assessments (PISA) math and science scores, SAT math scores, National Assessment of Educational Progress (NAEP) math scores and interest in STEM at the high school level. It relies on data from the U.S. Bureau of Labor Statistics, the National Center for Education Statistics, the College Board, the National Research Center for Colleges & University Admissions, the ACT and the Organization for Economic Co-operation and Development.
As with other widely followed indices like the S&P 500 or the Consumer Price Index, the weights and components for future U.S News/Raytheon STEM Indices will likely change as more numerous and refined indicators become available. “For instance, we know that the way the federal government classifies STEM jobs undercounts them, possibly by a lot,” Kelly explains.
“Science, technology, engineering and math form the foundation of the global economy,” says Raytheon Chairman William Swanson. “Yet, as the STEM Index suggests, if educational trends continue, fewer qualified candidates will be available to support growth in these areas. It’s critical to our business and the United States’ long term economic outlook that we inspire young people to engage in STEM and dedicate resources to supporting them throughout their academic lives.”
Even with the most weight given to the broadest indicators — STEM employment and STEM degrees granted — the Index shows there has been only modest gains in overall STEM activity since 2000.
The component index for AP tests offers one such example. “In 2000, around 423,000 STEM AP tests were taken,” Morse explains. “In 2013, that number ballooned to 1.2 million. This shows us that despite our graph looking like AP STEM is in a major downslide, in reality there has been real growth in numbers. This is an indication of the rapidly growing popularity of all AP tests in general and that the growth in STEM AP tests is not keeping pace.”
Still, the relatively flat overall Index calls into question the effectiveness of multiple plans to increase STEM awareness and activity in the U.S., including President Barack Obama’s 2009 Educate to Innovate initiative. While the actual number of STEM degrees granted, employment in STEM fields, and the number of STEM-related AP tests have gone up since 2009, other indicators — like SAT and NAEP scores — have stagnated, and other key areas have declined.
“There’s not much evidence so far that government actions have had a significant effect,” Kelly says, stressing that some initiatives, like the Common Core State Standards, which were created in part to address the national STEM education crisis, have not been yet fully implemented.
According to the U.S. News/Raytheon STEM Index, high school student interest in STEM fields reached a low point in 2004, dropping nearly 19 percent from the base-year calculations. Interest levels climbed steadily until 2009, when they began to decline again. In spite of the intense drive to encourage students to study science, interest levels fell between 2009 and 2013 and are now just slightly below where they were in 2000.
The lack of progress among female and minority students is especially troubling in the long term.
“A big part of the problem is the continuing split that puts Asian-Americans and white males on the side of those who are driven to acquire STEM skills, and women, blacks and Latinos on the other side of the dividing line” says Kelly. “T
he labor pool going forward will not be made up mainly of white males and Asian-Americans. The labor pool will be increasingly Latino, and that group is not advancing in STEM fields right now.”
As high school students’ interest in STEM has waned, their scores on international assessments like PISA have dropped, the U.S. News/Raytheon STEM Index shows. According to the latest PISA data, released in December, students in other countries continue to outperform those from the United States in math and science.
“The big picture of U.S. performance on the 2012 PISA is straightforward and stark. It is the picture of educational stagnation,” Secretary of Education Arne Duncan said at the time. “In a knowledge-based, global economy, where education is more important than ever before, both to individual success and collective prosperity, our students are basically losing ground.”
But Kelly cautions that the issue is more complicated than just “us vs. them.” While international assessments like PISA show the U.S. is falling behind, other data used in the U.S. News/Raytheon STEM Index, like NAEP scores, show an improvement over time.
“Even with gains domestically, we can still be losing ground against our international competitors,” Kelly explains.
“There are many very good initiatives and lots of work being done to address the problem,” he continues. “But as the data show, it’s still not enough. There is a mismatch of skills and jobs, of supply and demand, and the challenge is to get them aligned again.”
PetSmart to Stop Selling Pet Treats Made in China
in ProductsIn an update of its investigation last week, the FDA said it found that antiviral drug amantadine in some samples of imported chicken jerky treats sold a year or more ago, but doesn’t think it caused the illnesses. The FDA said it will continue to investigate.
Rival Petco announced on Tuesday that it would remove all Chinese-made treats from its 1,300 stores by the end of this year after shoppers pushed them to do so. The San Diego company said it has been cutting the number of those treats it sells over the past three years.
PetSmart Inc., which is based in Phoenix, owns more than 1,300 stores in North America.
Toxic Jerky Treats Linked to More Than 1,000 Dog Deaths
in Product reviews, Products“Always be aware of what you’re buying and where it’s coming from,” Levine said.
Yet that may not always be enough to keep pets safe; products stamped “Made in the USA” could still contain ingredients sourced from China or other countries, the FDA warned.
The FDA has partnered with the Centers for Disease Control and Prevention (CDC) to figure out what foods may be contributing to pet disease. The study will compare the foods eaten by sick dogs to those eaten by dogs who haven’t gotten sick, in order to determine if the jerky is really the culprit.
So far, testing of jerky pet treats from China revealed low levels of antibiotics as well as the antiviral drug amantadine in some chicken samples. Although FDA-approved for pain-control applications in humans and in dogs, the agency prohibited its use in poultry in 2006 to help preserve its effectiveness.
The FDA does not believe amantadine contributed to the illnesses, as the side effects of the drug do not correlate with the symptoms seen in the pets; however, amantadine should not be present at all in jerky treats.
Chinese authorities have agreed to conduct additional screenings and follow up with jerky treat manufacturers, and the FDA has notified U.S. treat makers of the presence of amantadine in some jerky products. The agency will also continue testing these products for drugs and other antivirals.
The FDA cautioned pet owners that jerky pet treats are not required for a balanced diet. If your pet experiences any sign of illness, including vomiting, diarrhea and lethargy, contact your veterinarian right away.
Surprise! The U.S. is Poised To Be a Rising Star in Manufacturing
in Jobs, Manufacturing & SourcingVietnamese Mobs Set Fire To Foreign Factories In Anti-China Riots
in Jobs“And because China wants to keep that oil rig in place into August, these protests could just be the first pages.”
Tran Van Nam, vice chairman of the Binh Duong People’s Committee, said workers initially held peaceful protests on Tuesday. But disorder broke out when the numbers swelled to about 20,000.
Gates were smashed and rioters set 15 factories on fire, he said.
“This caused billions of dong (hundreds of thousands of dollars) in damages and thousands of workers will have lost their jobs,” Nam said by telephone.
“We urge everyone to stay calm, exercise restraint and have faith in the leadership of the Party and State.”
F.Y. Hong, president of Taiwan’s Formosa Industries Corp, one of the companies that was attacked, said about 300 rioters looted televisions, computers and personal belongings of workers.
“Due to the limited number of police, they couldn’t stop the looters. The situation was like in a country where there were no authorities to protect its people,” Hong said.
A police official in Binh Duong province, speaking by telephone, said about 200 people had been arrested.
“We are working on other areas in the province … We haven’t seen any injuries.”
A Singapore foreign ministry spokesman said the premises of a number of foreign companies were broken into and set on fire in two Vietnam-Singapore joint venture industrial parks in Binh Duong. He said the Singapore government had asked Vietnam to restore law and order immediately, but gave no other details.
“Everyone is terrified,” said Serena Liu, chairwoman of the Taiwan Chamber of Commerce in Vietnam. “Some people tried to drive out of Binh Duong, but looters had put up road blocks.”
RISK OF MILITARY CLASH
Story said the Vietnamese government would now be under increasing pressure to respond, which could risk a military clash at sea with China that Vietnam could not win.
Dozens of ships from both countries are around the oil rig, and the two sides have accused each other of intentional collisions, increasing the risk of open confrontation.
In Beijing, Foreign Ministry spokeswoman Hua Chunying told reporters that China was seriously concerned about the violence and had summoned Vietnam’s ambassador to protest.
China has “demanded the Vietnamese side make efforts to adopt effective measures to resolutely support eliminating illegal criminal acts and protect the safety of Chinese citizens and institutions”, Hua told reporters.
Hong Kong-listed sports shoe maker Yue Yuen, which supplies footwear to Adidas, Nike and other international brands, said it had suspended production in Vietnam because of the protests, but there was no damage to its facilities and its workers were safe.
A spokesman for global exporter Li & Fung, which supplies retailers like Kohl’s Corp and Wal-Mart Stores Inc with clothing, toys and other products, said some of its suppliers in Vietnam had halted production on Wednesday as a precautionary measure. He gave no further details.
Anti-China sentiment was also evident in Manila, as the Philippine government accused Beijing of reclaiming land on a reef in disputed islands in another part of sea, apparently to build an airstrip.
“If these reports are true, this would represent a significant step by the Chinese, potentially allowing them to extend their airborne reach,” said Story, the analyst.
The spike in tensions over the oil- and gas-rich South China Sea comes two weeks after U.S. President Barack Obama visited the region and expressed support for long-time allies Japan and the Philippines, both of which are locked in territorial disputes with China. Vietnam is also stepping up ties with the United States.
CLAIMS AND COUNTER-CLAIMS
China claims almost the entire South China Sea, an area rich in energy deposits and an important passageway traversed each year by $5 trillion worth of ship-borne goods.
Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims on the area.
Philippine foreign affairs department spokesman Charles Jose said China had been moving earth and materials to Johnson South Reef, known by the Chinese as Chigua and which the Philippines calls Mabini Reef, in recent weeks.
He said China was reclaiming land in violation of the Declaration on the Conduct of Parties in the South China Sea, an informal code of conduct for the region.
“I think they’re to construct an airstrip there,” Jose said.
However, Richard Bitzinger, a military analyst at the S. Rajaratnam School of International Studies in Singapore, said the airstrip was unlikely to be a strategic game-changer in the South China Sea because of the difficulty in building a workable runway on the atoll.
“It would be a nice tool to have in the box of options to project power, but it is probably going to be far too small to have a huge impact,” Bitzinger said.
“At this point I would be very surprised to see this develop into any airbase of any significant size … China’s holdings in the Spratlys are just too small.
“It is probably as much a political move as anything else, the laying down of one more marker to solidify their position and continue their campaign of creeping assertiveness.” (Additional reporting by Donny Kwok and Greg Torode in Hong Kong, Faith Hung in Taipei, Nguyen Phuong Linh and Rachel Armstrong in Singapore and Megha Rajagopalan and Michael Martina in Beijing; Writing by Raju Gopalakrishnan; Editing by Mike Collett-White)
Brand Building on Made in America Foundation
in Manufacturing & Sourcing, Marketing Your BrandDomestic production gave them the ability to produce quickly and fill reorders. There is an existing production base in the region and the move could help retain U.S. jobs, which was important for the Ukrainian-born Sobolevs, who both emigrated as children from the former Soviet Union, meeting many years later in Los Angeles.“I’m from Odessa and Michael is from Donetsk,” said Galina Sobolev, the designer behind Single. “We’ve lived in this country for 37 years. We both felt very strongly about giving back to the community and giving back to this country.”
The company had always kept a portion of its production local to allow for quick turn and reorder business. “The majors really loved that we could do that,” Galina Sobolev said. “[But] at one point when the production of all our silks got really huge, we were doing maybe 60 percent domestically and our China production went up to 40 percent.”
The husband-and-wife team began investigating what it would take to move all production back to America.
“We started pricing some of the product,” Galina Sobolev said. “The difference was so insignificant that we decided to absorb it into the cost. [We said,] ‘For the amount of profit that we’re going to lose by producing in the U.S., we’d rather forgo the extra money and create jobs here for local factories.’”
These days, 100 percent of the Single collection is produced in the United States with the exception of a few labor-intensive items in the Holiday collections, such as beaded dresses made in India. And the move has paid off—particularly among Single’s international retailers.“We have a lot of Canadian customers who are very interested in the fact that the product is made in the USA,” Sobolev said. “And we have a lot of European customers. In Belgium and Germany, they are very adamant. If the whole collection is made in USA, they triple their orders.”
Domestic manufacturing has allowed the company to fill reorders when a style suddenly takes off for a retailer. “Our edge is the fact that we can turn goods in two to three weeks, which nobody in China can do,” Sobolev said. “For clients such as some of the onliners, they can chase business.”
That was the case recently for one retailer that purchased a few stock inventory pieces from a previous collection to sell online. The retailer bought 18 units of one dress style—“That’s all we had in stock,” Sobolev said—and oversold it by 390 units. Fortunately, Sobolev was able to secure the fabric from the original local vendor and quickly put the reorder into production.
“From the day of the order to the day it [left] our door it was 11 days. And we just got another reorder from them for, I think, 460 pieces of the same dress,” she said.
Neiman Marcus’ Cusp department had a similar situation with Single’s “Janessa” jumpsuit, Sobolev said.
“They had an 83 percent sell-through, and they even sold out of it online,” she said. “We were able to do a quick reorder for them for 60 or 80 units. Just the fact that we can do this so quickly and they’re able to reorder, it’s very exciting for them. This is the kind of edge domestic manufacturing allows us.”
Spread The Word
Every piece in the Single collection has a label that reads “Single Los Angeles.” Each item has a hangtag that reads “Made in USA,” although Sobolev said she’s planning to change that to read “Proudly Made in USA.” The linesheets, lookbook and website will also soon have “Made in USA” prominently displayed. At the Single showroom in Atlanta, the sales staff display signs that read “This Collection Is Made in USA.”
“The buyers get very excited when they find out that the collection is Made in USA—especially in our Midwest territories and in the South and Southeast,” Sobolev said. “At the regional markets, it’s the first thing my sales team tells every buyer that walks in.”
Sobolev frequently attends the regional markets in Dallas and Atlanta, as well as the New York Market five times per year.
“In New York, nobody cares where things are made, honestly. It’s all about the price,” she said. “I’m getting the most support for made in USA from Texas, from Louisiana, from specialty stores in the Carolinas.”
Much of the Single collection is made using European fabrics, but Sobolev looks for domestic resources, as well. “We have one lace that we have been running for about 10 years now. It’s a very vital part of our Holiday collections,” she said. “It’s made in this little factory in New Jersey. The machine itself is about 200 years old [and] imported from England. And it’s a beautiful re-embroidered lace. It looks like [a high-end Italian] lace, but it’s a lace that can be worked into our contemporary price points.”
Sobolev said some retailers ask if the company will source a style overseas to reduce the price.
“Of course, everyone is price-sensitive these days,” she said. “But sometimes we have to put our foot down and say, ‘Sorry, we can’t make it at that price. However, we can do it at this price, and you can have a product in your store that says ‘Made in USA.’”
California Sportswear
Founded in 1994, Single sells in higher-end department stores such as Saks Fifth Avenue and Neiman Marcus, as well as higher-end specialty stores and boutiques around the world such as Tootsies in Texas, Montmartre in New York and Mendocino and Want in Canada. Although the company started as a sportswear maker, over the years it became well known as a dress resource. For Fall, Sobolev is returning to the brand’s sportswear roots with a collection of luxe separates Sobolev calls “California dress-up casual.”
“If you look at the way people are dressing today, it’s a lot easier for a girl when she’s going on a date to run in and buy two new blouses to wear with her favorite leather legging or skinny jean,” she said. “Unless she needs a dress for a specific occasion, I’m seeing more of a turn to an easy, casual kind of dressed-up sportswear. It doesn’t mean we’re not doing dresses anymore. There’s still two or three dresses in every group, and we still have
our assortment for our customers that are very much into dressing that career gal.”
Private-label businessIn addition to Single, the company has a strong private-label business manufacturing for a handful of brands and retailers.
The company also produces exclusive Single collections for retailers such as the White Single Dress label, which sells at Rue La La.
“We do thousands of structured dresses for Boston Proper, and we have for the last 15 years,” Sobolev said. “That’s the beauty of being able to turn a 600-unit reorder in three to five weeks domestically.”
The Sobolevs’ private-label business has grown organically as word gets out that the company is a resource for brands looking for domestic production. “We have become kind of like the Intelof the fashion community,” Sobolev said. “[People will say,] ‘You want to make something domestically? Call the people at Single. They can turn things in two to three weeks.’”
New Brand Extensions
The company recently added plus sizes for Saks and has since expanded the offering to other retailers, such as e-tailer Madison Plus. Although still in the early stages, the plus-size capsule collection fills a void in the contemporary market for plus sizes.
“There aren’t a lot of choices for the [contemporary plus-size] consumer,” Sobolev said. “We really invested in developing the blocks, and we got a great fit model.”
Sobolev hopes to expand Single’s plus-size offerings into a stand-alone collection.
“I would love to turn this into more of a proper business—have it not just be a small capsule segment but really expand it on various levels,” she said.
Another new concept in the works is the Single men’s underwear line developed by the Sobolevs’ 24-year-old son, Julian. Still in the test stages, the collection features the Single name and an American flag on the elastic waistband.
Just as Single is committed to domestic production, Galina Sobolev said she wishes more manufacturers and retailers would commit to Made in America product. Retailers, in particular, could highlight American-made products in their stores, she said.
“Why not have a section for Made in USA?” she said. “The manufacturers today have a responsibility—we all, as Americans, have a responsibility—to this country and the security of its economy and the future for our children.”
Factory Jobs Flow Back to America: China’s rising costs spark sea change in manufacturing
in JobsThe move is part of a sea change in American manufacturing: After three decades of an exodus of production to China and other low-wage countries, companies have curtailed moves abroad.
Some, like Generac, have begun to return manufacturing to U.S. shores.
Although no one keeps precise statistics, the retreat from offshoring is clear from various sources, including federal data on assistance to workers hurt by overseas moves.
U.S. factory payrolls have grown for four straight years, with gains totaling about 650,000 jobs. That’s a small fraction of the 6 million lost in the previous decade, but it still marks the biggest and longest stretch of manufacturing increases in a quarter of a century.
Harry Moser, an MIT trained engineer who tracks the inflow of jobs, estimates that last year marked the first time since the offshoring trend began that factory jobs returning to the U.S. matched the number lost, about 40,000 each.
“Offshoring and ‘reshoring’ were roughly in balance — I call that victory,” said Moser, who traces his interest in manufacturing to his parents’ work at the long-closed Singer Sewing Machine plant in New Jersey. (He once worked there too.) He now runs the Reshoring Initiative, a Chicago nonprofit that works with companies to bring manufacturing jobs back to the U.S.
Several factors lie behind the change.
Over the past decade, Chinese labor and transportation costs have jumped while U.S. wages have stagnated. Manufacturing also has become more automated, further reducing labor’s weight in the cost equation.
The boom in natural gas production in the U.S. has led to a 25 percent decrease in gas prices in the U.S., contrasted with a 138 percent increase in China, according to The Boston Consulting Group.
Many U.S. manufacturers also report growing problems with quality control of goods made in China. “We got to the point where everything we were bringing in had to be inspected,” said Lonnie Kane, president of apparel-maker Karen Kane, noting that his company used to check just 10 percent of goods from China.
“Now prices are escalating, quality is dropping and deliveries are being delayed,” he says. In the past three years, Kane has shifted 80 percent of his production from China back home.
Expansion in the domestic apparel industry remains unusual because the labor-intensive work can be done in many low-wage countries.
But in other industries, a growing number of domestic and foreign companies — including General Electric, Caterpillar, Toyota and Siemens — are opting to build or expand their facilities in the U.S., particularly in the Southeast, where labor costs are low.
For the first time, some small contract manufacturers in the U.S. are beating bigger rivals in Asia, the center of global industrial production.
At Zentech Manufacturing in Baltimore, the company’s president, Matt Turpin, recalls his skepticism when salesmen told him two years ago about their efforts to land a contract making 5,000 to 10,000 wireless printers. He was sure an overseas competitor would get the work.
“I don’t know why you’re wasting your time chasing that business,” he says he told the sales force.
Zentech ultimately won the contract, and Turpin says the company added at least five full-time employees to his shop, where the front office window is draped with a large American flag.
William Davidson, a test technician at Zentech, now earns $17.50 an hour working on those printers and other company products. Before getting hired at Zen-tech three years ago, Davidson, 62, had been unemployed for 18 months. His previous employer, a Delaware repairer of cable boxes, had moved its operations to Mexico.
“The worst part of it was we had to help them pack things up for the move,” he says.
The offshoring “didn’t feel right” because of the families affected by layoffs, he said, but the company needed to make the move to remain competitive.
Generac grew rapidly over most of the rest of the decade. Its sales rose to $1.5 billion last year, and it now has about 3,300 workers, including 720 in Whitewater, its largest plant. But the past decade also saw costs surge in China while they rose little in the U.S.
What began as a $100 gap in the cost of producing an alternator narrowed as the Chinese yuan jumped in value and Chinese wages and other costs soared.
The tipping point came when Generac had enough sales to justify investing millions of dollars in new equipment for the Whitewater plant. The company can now produce an alternator with one worker in the time it took four workers in China.
More Manufacturers Looking To Re-Shore Back To U.S.
in ReshoringBrad DeNoyer, manufacturing and distribution leader for accounting and advisory firm Baker Tilly Virchow Krause LLP, said a lot of middle market manufacturers supplying larger companies are starting to come back to the U.S.
“There’s just not necessarily a drive to go there anymore and there is talk about coming back,” DeNoyer said. “Five to 10 years ago, the work was leaving and going overseas, even the smallest of companies was going to China. Now the faucet has stopped and there is talk about whether to come back.”
But some manufacturers are just starting to have conversations with Milwaukee-based suppliers about re-shoring.
Frank Krejci, president and chief executive officer of Strattec Security Corp., also heads up a contract die-casting division called Strattec Component Solutions. Companies that used to get castings from China are now looking to bring back the work to the U.S., but this push to come back home isn’t going to happen overnight, Krejci said.
“This is not an impulse buy at a grocery store,” Krejci said. “The choice is…do you move inventory or tools? What manufacturers are more likely to do is create a separate set of tools, then ramp up in America and shut down in China. But they are still getting the parts from China.
“But next year they are coming out with a new and improved version of their product. And instead of having the new tools coming from China, now they are making it in America.”
Krejci also said more companies are auditing his firm to determine if they might need his company’s services six months or two years down the line for their next product generation.
What does that mean on the jobs front?
Jeff Sachse, regional economist for the Wisconsin Department of Workforce Development, said that he’s seeing manufacturing companies in the four-county metro region have been hiring at a stable rate. The re-shoring effort has been segmented, but companies have also been reinvesting in some production facilities and cutting costs.
“There is a lot of interest in re-shoring from China…Some of that was driven by labor costs because they dropped during the recession and a lot of companies got rid of the high-wage earners because a lot of that was driven by seniority, but there was definite cost cutting going on,” Sachse said. “So we’re seeing relatively lower wage rates in assembly here than there used to be and we are seeing more competitive costs compared to other countries like China.”
For Port Authority Projects, Sweeney Wants Made in USA Steel
in American Made, GovernmentHe said that maintaining a healthy domestic steel industry was also vital to the national security.
“We should be careful that a cost-analysis is done to make sure it takes into account jobs,” said Sweeney (D-Goucester), a vice president and general organizer with the International Association of Ironworkers union, whose members erect steel structures. “There are certain things this country has to have to protect ourselves and to be able to produce steel is very important.”
As with all bills that would impose restrictions on the Port Authority, identical legislation to Sweeney’s measure (S-2061) must also be adopted in New York State. He said he was still seeking a New York counterpart.
If Sweeney’s measure becomes law, it would apply to many of the projects slated under a $27.6 billion 10-year capital plan approved by the Port Authority in February.
The use of foreign steel in public projects became an issue in the region last year, when the Metropolitan Transportation Authority and the Port Authority allowed Chinese steel to be used for work on the Verrazano-Narrows and Bayonne Bridges.
Critics of Chinese-made steel, including the United Steelworkers union, complained that U.S. producers could not compete with mills in China, which pay workers as little as $15 a day and benefit from legal and financial support from the Chinese government. China is by far the world’s leading steel maker.
Sweeney said his legislation was prompted by a Star-Ledger article on the controversy in September.
The contractor for the Bayonne project, a partnership of Oklahoma-based Kiewit and the Swedish construction giant Skanska, eventually decided to use Italian steel instead of Chinese, along with some American steel.
The U.S. government already requires domestic steel to be used on public projects
that receive federal funds, and Sweeney said his bill would unburden those who pay bridge tolls by ensuring that Port Authority projects were eligible for those funds.
As in the rest of the country, steel manufacturing has been in decline in New Jersey for decades, and only a handful of operations remain, including MRP LLC in South Plainfield, which has supplied steel beams for the World Trade Center site, and a plant in Sayreville run by Gerdau Ameristeel.
The Port Authority declined to comment specifically on Sweeney’s bill. However, agency officials noted that the $1.5 billion Goethals Bridge replacement project is subject to a federal requirement that 99.9 percent of materials be produced domestically, while the agency’s own request for proposals on a $3.6 billion replacement of the Central Terminal Building at LaGuardia Airport calls for at least 51 percent domestic materials.
Daniel J. Ikenson, a trade policy specialist at the Cato Institute, said Sweeney’s measure was a misguided appeal to patriotism that would inflate the cost of public projects.
“It’s just common sense,” Ikenson said. ” Only a rudimentary understanding of supply and demand is needed to see that limiting competition for state procurement ensures that taxpayers get a smaller bang for their tax bucks.”
Last fall the agency said that it allowed the use of Chinese steel to expedite the Bayonne project, which is intended to allow larger container ships to reach terminals in Newark and Elizabeth once an expansion of the Panama Canal is completed next year.
But Sweeney rejected the notion that domestic steelmakers lacked the capacity or speed needed in such situations.
“This isn’t that hard to figure out,” Sweeney said. “If you know you’re going to build a bridge, you contact steel manufacturers in the United States and you say, I’m going to need this may tons of steel.’ They can do it.”
U.S. Manufacturing Becoming Low Cost
in Jobs, Made in USA, Manufacturing, ReshoringPicture Eugene Hoshiko, File/Associated Press
U.S. manufacturing becoming low cost over the past decade compared with factories in China, Brazil and most of the world’s other major economies.
So says a new private study, which found that rising wages and higher energy costs have diminished China’s long-standing edge over the United States. So has a boom in U.S. shale gas production. It’s reduced U.S. natural gas prices and slowed the cost of electricity.
The Boston Consulting Group is issuing a report on its study of manufacturing costs in the 25 biggest exporting countries. Only seven of those countries had lower manufacturing costs than the United States did this year. And since 2004, U.S. manufacturers have improved their competitiveness compared with every major exporter except India, Mexico and the Netherlands.In 2004, for example, manufacturing in China cost 14 percent less than manufacturing in the United States. By this year, the China advantage had narrowed to 5 percent. If the trends continue, Boston Consulting found, U.S. manufacturing will be less expensive than China’s by 2018.
Over the past decade, labor costs, adjusted to reflect productivity gains, shot up 187 percent at factories in China, compared with 27 percent in the United States. The value of China’s currency has risen more than 30 percent against the U.S. dollar over the past decade.
The higher Chinese currency made goods produced in China and sold abroad comparatively more expensive. And foreign goods became comparatively more affordable in China.
Chinese electricity costs rose 66 percent, more than double the United States’ 30 percent increase. The start of large-scale U.S. shale gas production in 2005 has helped contain electricity bills in the United States and neighboring Canada and Mexico.
China, too, has reserves for shale gas. But it will need years to develop them.
“This is not something you can turn on overnight,” said Justin Rose, a partner at Boston Consulting and co-author of the study.
Brazil has lost even more ground than China. In 2004, manufacturing was 3 percent cheaper in Brazil than in the United States. By 2014, Brazil was 23 percent more expensive. Brazilian factories didn’t improve efficiency enough to offset rising energy and labor costs.
The countries where manufacturing was cheaper than in the United States are Indonesia, India, Mexico, Thailand, China, Taiwan and Russia.
Australia was the most expensive country for manufacturing. Its costs were 30 percent higher than those in the United States.
The survey doesn’t include transportation costs, which vary depending on where goods are shipped. Several countries also face obstacles not captured by Boston Consulting’s manufacturing cost index — from corruption to inefficient government bureaucracies.
SOURCE: Washington Post
We Need To Save The Internet
in Technology, UncategorizedTheir lobbyists and lawyers have taken over the FCC — the agency meant to keep them in check. Now, the former lobbyist running the FCC is about to announce new rules that will kill Net Neutrality — the rule that stops Comcast, AT&T, or Verizon from deciding which sites you’re allowed to visit.
There are two specific subcommittees in Congress that could stop this decision before its officially proposed on May 15th, or even overturn it.
Right now, the internet works like this: both people and websites pay money to their local (often monopolistic) Internet Service Provider (ISP) like Comcast or Verizon. In return, they’re hooked up to the internet. Information flowing through the internet is all treated equally. Under these new rules, the ISPs could hold us hostage. Verizon could refuse to let us see Youtube unless Google hands them wheelbarrows full of cash. People researching medications might not be able to find the studies showing serious side effects if Pfizer, GlaxoSmithKlein and others pay big bucks to get their sites to show up fastest. Most alarmingly, the legal basis of these rules could allow ISPs to censor any site they didn’t like.
Groups like SumOfUs only exist because of the open internet of today. Under these new rules, new innovations would find it much harder to take off, because their superior design would be behind an intentionally broken and slow connection. Sites like Wikipedia could disappear from public view or start plastering themselves in ads to pony up the cash needed to pay Comcast, AT&T, and Verizon for the privilege of allowing us to access them.
The head of the FCC is a former lobbyist and telecommunications executive, and he’s hired Comcast, Verizon, and AT&T corporate flacks into the FCC specifically to draft rules for destroying the internet. No wonder they love his proposal.
This is an all-hands on deck moment.
Sign the petition to the House and Senate committees overseeing the FCC. We can’t let Comcast, Verizon, and AT&T get away with destroying the internet.
U.S. Businesses Being Destroyed Faster Than Being Created
in Economy, Small BusinessI mapped the state data below. While all states showed steep drops in new firms, New York stands out for its much smaller decline in the share of new companies than other states — only 18 percent, compared with the 50-state average of 47.2 percent. Illinois, Texas, New Jersey and Missouri round out the top five.
At the very least, the Brookings findings strongly suggest that when it comes to luring new businesses to a given state, there are a lot more factors at play than straightforward calculations of corporate tax rates.
The Hidden Weakness in This Month’s Jobs Report
in JobsHere’s the bad news: The labor force fell by 806,000 in April, and most of that was because fewer people entered it to begin with. Reentrants — people who have worked before and just started looking again — plummeted by 417,000. That’s the largest monthly drop, in absolute terms, on record going back to 1967.
It’s confounding, because a stronger labor market tends to suck people in, not push them away. Indeed, the labor force had been growing the past six months — up 1.6 million between October and March — before this reversal. The likeliest explanation is that the data got ahead of the trend and that this is just a correction.
Still, there was plenty more to be disappointed about. The average work week was unchanged last month. So were average hourly earnings. Both of those are pretty good predictors of future demand — and future hiring — so there’s not much hint of better times ahead. If anything, the economy looks like it will just keep chugging along at its 2 percent pace. You can see how consistently mediocre the recovery has been in the chart below. Job growth has been the same since 2012.
U.S. Economy Adds 288,000 Jobs in April; Jobless Rate falls to 6.3%
in Economy“It’s just what the doctor ordered in terms of a further piece of confirmation that the winter was abnormal,” said Eric Lascelles, chief economist at RBC Global Asset Management. “We can just expect further economic normalization.”
Wall Street opened higher on the news, but the major U.S. indexes were mixed at mid-day. The blue-chip Dow Jones Industrial Average inched into the red, while the broader Standard & Poor’s 500-stock index was up slightly. The tech-heavy Nasdaq gained 0.2 percent.
The jobs report contained at least one ominous note. The nation’s workforce shrank by more than 800,000 workers in April, sending the labor force participation rate plummeting 0.4 percentage points to 62.8 percent. The Labor Department said most of that decline was due to fewer people joining the workforce.
“People are not giving up in the labor force,” U.S. Labor Secretary Thomas E. Perez said in an interview. “That would be a fundamentally different diagnosis of where we are now.”
The number of re-entrants — people looking for a job after being out of the labor market — plunged by 417,000, the largest drop on record. New entrants declined by 126,000. Many high school and college students typically begin entering the job market in April, but the number of people younger than 25 in the workforce fell by 484,000. The participation rate for teens ages 16 to 19 hit the second-lowest level ever.
“I would actually say that this big drop in the unemployment rate is not consistent with a really robust labor market because that labor force participation rate did not rise, and the employment-to-population ratio is shockingly low,” said Tara Sinclair, an economics professor at George Washington University and economist at Indeed.com, one of the nation’s largest sites for job postings.
Another factor driving the smaller workforce could be the expiration of benefits for the long-term unemployed at the end of last year. To qualify for the payments, workers have to show they are looking for jobs. Without the incentive of unemployment benefits, many of them might have ended their search.
The U.S. Senate voted in April to extend unemployment benefits through May for workers who have been out of a job for six months or longer, but the measure faces a rocky road in the House. On Thursday, Sens. Jack Reed (D-R.I.) and Dean Heller (R-Nev.), the bill’s sponsors, urged the House to move quickly.
“Emergency unemployment insurance is a lifeline for job seekers, and restoring it will strengthen the recovery by bolstering demand at a critical time,” Reed said.
April’s pickup in hiring also helps validate the Federal Reserve’s decision this week to continue scaling back its support for the recovery. The nation’s central bank is reducing its monthly bond purchases by $10 billion to $45 billion — about half the amount it was pumping into the economy every month last year. The Fed has tied its stimulus to the health of the labor market, and Friday’s data clearly show it is improving.
The construction industry provided one of the biggest boosts to job creation last month. The sector added 32,000 jobs, concentrated in heavy and civil engineering and residential building. Over the past year, it has hired 189,000 workers, with the bulk of those gains coming within the last six months.
The main hiring engine was the professional and business services sector, which created 75,000 net jobs. Retailers and bars and restaurants each added more than 30,000 jobs. The health care industry gained 19,000 positions.