Is New Balance Making the U.S. Military’s Only Training Shoe?
Training 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.
Tag Archive for: Made In America
America's STEM Talent Pool Too Shallow to Meet Demand
A new U.S. News annual index, sponsored by Raytheon, measures key indicators of STEM activity in the U.S.
Despite some signs of improvement, student aptitude for and interest in science, technology, engineering and mathematics has been mostly flat for more than a decade, even as the need for STEM skills continues to grow, according to the U.S. News/Raytheon STEM Index.The Index, the first comprehensive index that measures the key factors relating to STEM jobs and education, shows that after a long period of flat to down indicators, there has been some upward movement, particularly in the actual number of STEM degrees granted at the undergraduate and graduate levels. But even with those numbers on the rise, as a proportion of total degrees granted they still hover close to the same levels that existed in 2000, indicating that the education pipeline to fill the current and future jobs that will require STEM skills still isn’t producing enough talent.“Just using the governments data, which is quite a conservative estimate, it’s clear that STEM is an important and growing part of the economy,” says Brian Kelly, editor and chief content officer of U.S. News & World Report. “Beyond that, we know that STEM skills may be required in as many as 50 percent of future jobs.”
The 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.
“We’ve clearly been in a slump for many years, but we’re seeing glimmers of hope that we’re coming out of that now,” he says, adding that underlying data from the Index show there is much more to the current STEM crisis than meets the eye. “When you take it apart, certain factors are masking the problem.”Bob Morse, the director of research for U.S. News, agrees.“It is important to realize that while the Index and its components can be used to measure trends, they don’t always depict the entire story,” says Morse, who worked closely with U.S. News data analysts Matthew Mason and Sam Flanigan on the Index. In some cases, the raw data may show an increase in STEM related activity in a given area even though the STEM index indicator for that area, once weighted and calculated, shows a decline over time.
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.”
SOURCE: US News
PetSmart to Stop Selling Pet Treats Made in China
PetSmart kicks off the Inspiration Waggin’ tour with a bus filled with pups on Friday, May 9, 2014, in Los Angeles. (Photo by Casey Rodgers/Invision for PetSmart/AP Images)
PetSmart is the latest major pet food retailer to say it will stop selling dog and cat treats made in China because of ongoing fears that they are making pets sick.
The company plans to have the treats off all of its store shelves by March 2015.”This is something we’ve been working toward for some time, and feel it’s the right thing to do for pets and our customers,” said PetSmart spokeswoman Erin Gray.Investigators at the U.S. Food and Drug Administration haven’t been able to prove that treats made in China are making pets ill. But since 2007, it has received more than 4,800 complaints of pet illnesses and more than 1,000 reports of dog deaths after eating Chinese-made chicken, duck or sweet potato jerky treats.
In 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.
SOURCE: ABC News
Toxic Jerky Treats Linked to More Than 1,000 Dog Deaths
More than 1,000 dog deaths may now be linked to toxic jerky treats, according to a recent update from the Food and Drug Administration (FDA).
The agency said that since 2007, there have been almost 5,000 complaints of pet illnesses related to the treats. The majority of the symptoms reported include gastrointestinal or liver disease, and about a third were linked to kidney and urinary disease.About 10 percent of the illnesses included other signs such as neurologic, dermatologic, and immunologic symptoms, and about 15 percent of the kidney and urinary disease cases also tested positive for Fanconi syndrome – a rare kidney disease also associated with the pet deaths.The FDA is still unsure of the specific cause for the reported illnesses and deaths, but most cases reportedly occurred after the pets had eaten chicken, duck or sweet potato jerky treats imported from China. Dr. Jonathan Levine, an associate veterinarian at Blue Pearl Veterinary Partners in New York City, said owners should always check the labels of whatever foods they give their pets.
“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.
SOURCE: Fox News
Surprise! The U.S. is Poised To Be a Rising Star in Manufacturing
After years of hand-wringing about the expense of making things in America, a new report from the Boston Consulting Group says that’s all changing. The shift is due in part to stagnant wages — at least that’s potentially good for something — and to a greater extent, the abundance and declining cost of natural gas.
In fact, there’s a bit of a role reversal underway.Five economies generally regarded as low-cost bases for manufacturing — China, Brazil, Czech Republic, Poland and Russia — are getting relatively more expensive. The reasons: wage increases, slowing productivity growth, currency swings and steep increases in energy costs. The U.S. is getting cheaper, along with Mexico. The reasons: wage stability, increasing productivity, a stable currency and, most dramatically, a sharp decline (50 percent) in the cost of natural gas since 2005, a result of the boom in shale gas. In a press release accompanying the report, BCG’s Michael Zinser said:
While labor and energy costs aren’t the only factors that influence corporate decisions on where to locate manufacturing, these striking changes represent a significant shift in the economics of global manufacturing.
There are few signs that the news has caught up with U.S. companies that continue to shun the U.S. for supposedly cheaper nations. According to a recent report by the Congressional Research Service:
China displaced the United States as the largest manufacturing country in 2010, as the United States’ share of global manufacturing activity declined from 30% in 2002 to 17.4% in 2012.
“Many companies are making manufacturing investment decisions on the basis of a decades-old worldview that is sorely out of date,” wrote Harold L. Sirkin, a BCG senior partner and a coauthor of the analysis. “They still see North America and western Europe as high cost and Latin America, eastern Europe, and most of Asia — especially China — as low cost. In reality, there are now high- and low-cost countries in nearly every region of the world.”
SOURCE: Washington Post
Brand Building on Made in America Foundation
STRONG SELLER: Single’s “Janessa” jumpsuit
When Gala Inc. founders Galina and Michael Sobolev began shifting their production for their contemporary line,Single, back to the United States about six years ago, there were several compelling reasons to bring manufacturing home.
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FAMILY BUSINESS: Galina & Michael Sobolev, pictured with their sons, Evan (far left) and Julian (far right). Daughter Sara not pictured.
LA LABEL: Every piece in the Single collection has a label that reads “Single Los Angeles,” and the company’s hangtags read “Made in USA.”
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Domestic 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.”
SOURCE: Apparel News
Factory Jobs Flow Back to America: China’s rising costs spark sea change in manufacturing
Lucas Remer helps produce alternators at Generac’s plant in Whitewater, Wis., where 80 factory jobs were created when the company reshored the manufacturing of a component to the U.S.A. from China. The move is part of a growing trend. GARY PORTER | MILWAUKEE JOURNAL SENTINEL PHOTO
Companies looking for return: After years of sending production overseas to China and other low-wage countries — known as offshoring — manufacturing jobs are returning to the United States. Executives are confirming the trend as more are actively reshoring jobs, or are planning to return production in the next few years, according to The Boston Consulting Group.
WHITEWATER, Wis. — In 2001, Generac Power Systems joined the wave of American companies shifting production to China. The move wiped out 400 jobs in southeast Wisconsin, but few could argue with management’s logic: Chinese companies were offering to make a key component for $100 less than the cost of producing it in the U.S.Now, however, Generac has brought manufacturing of that component back to its Whitewater plant — creating about 80 jobs in this town of about 14,500 about 25 miles north of the Illinois state line.
The 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.
Here in Wisconsin, a similar story has played out with Generac.Aaron Jagdfeld, the company’s chief executive, was the comptroller at the time of the offshoring. Jagdfeld, now 42, had grown up in the region and graduated from the University of Wisconsin at Whitewater with an accounting degree.
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.
SOURCE: DON LEE TRIBUNE WASHINGTON BUREAU
More Manufacturers Looking To Re-Shore Back To U.S.
Frank Krejci, president and CEO of Strattec Security Corp.
Master Lock LLC, Caterpillar Inc., General Electric Co. and Whirlpool Corp. have all re-shored products back to the U.S., but more manufacturers are starting to lay the groundwork to come back home, according to a presentation by Deloitte Development LLC.
The reason — U.S. manufacturing labor costs have remained flat over the past 12 years and are substantially lower than in China, Canada and Germany; the cost of energy and plastics has dropped; and Chinese-made goods are more expensive for U.S. consumers to buy.So are suppliers to larger firms starting to think about coming back home?
Brad 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.”
SOURCE: Milwaukee Business Journal
U.S. Businesses Being Destroyed Faster Than Being Created
The American economy is less entrepreneurial now than at any point in the last three decades. That’s the conclusion of a new study out from the Brookings Institution, which looks at the rates of new business creation and destruction since 1978.
Not only that, but during the most recent three years of the study — 2009, 2010 and 2011 — businesses were collapsing faster than they were being formed, a first. Overall, new businesses creation (measured as the share of all businesses less than one year old) declined by about half from 1978 to 2011.
The authors don’t mince words about the stakes here: If the decline persists, “it implies a continuation of slow growth for the indefinite future.” This lack of economic dynamism, particularly the steep drop since 2006, may be one reason why our current recovery has felt like much less than a recovery. As Matt O’Brien noted on Wonkblog last week, annual job growth rates have stubbornly refused to budge above 2 percent for the duration of the recovery.The authors of the Brookings study dug beyond the national numbers to look at the change in new firms at the state and metro levels and found that they generally mirrored the national trends.
I 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.
SOURCE: Robert Litan (The Brookings Institution) and Ian Hathaway (Ennsyte Economics). GRAPHIC: The Washington Post. Published May 5, 2014.
At the other end, Alaska had the largest drop in new business, at 61 percent. Hawaii, Vermont, New Mexico and Wyoming rounded out the bottom five. Teasing out the causes of the overall decline or the variation between states is difficult; the authors stressed to me that their data don’t answer the questions of why or how just yet. But they will be looking into that in the months ahead.No immediate pattern emerges from the state-level geography, but one thing is worth nothing. For kicks I tried to correlate the drops in new businesses in each state with the states’ scores on the Tax Foundation’s 2014 State Business Tax Climate Index. There was no significant relationship one way or the other. For example, New York, which showed the lowest decrease in new businesses, actually scored dead last in the Tax Foundation’s ranking. Wyoming had one of the largest declines, even though it ranked first in the Tax Foundation’s report.
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.
Polo Ralph Lauren Clothing Line to be Made in Rochester
Before a throng of cheering Hickey Freeman Co.employees, company officials and Sen. Charles Schumer Monday announced a $1 million manufacturing deal with Polo Ralph Lauren and declared that there are more such deals to come.
“We’re no longer interested in survival,” said Stephen Granovsky, CEO of Toronto-based Grano Retail Holdings, which bought the famed Rochester clothing company last year. “Now we’re interested in growth.”Schumer said, “We were looking for quite some time for the right parent (for Hickey Freeman). Now we’ve found it. We’ve come home, in a sense.”
Under the contract with Polo Ralph Lauren, Hickey Freeman will manufacture the company’s “Blue Label” line of tailored suits and sport jackets. The work — which could lead to more Polo contracts for Hickey, Granovsky said — is expected to begin next month.
The deal will increase Hickey’s revenue by at least 10 percent, Schumer said.
Granovsky said the deal was worth about $1 million. He said there will be at least two other such contracts with major clothing labels in the coming weeks.
“There is stability now at Hickey Freeman,” Granovsky said.
Schumer said, “To be able to bring together two dynamic, trailblazing American clothing brands is a huge step forward for Hickey Freeman.”
Officials declined to provide details about the pending contracts, but said the additional work will help Hickey achieve its goal of full factory employment by 2015. The workforce now numbers 415.
Schumer said Hickey’s fortunes improved when Grano bought it in part because Grano also owns the Canadian high-end men’s clothier, Samuelsohn, and understands the importance of quality tailoring over quick returns on investments.
The new deal, and the stability Schumer and Granovsky cited, is in contrast to Hickey’s tumultuous business life over the past several years.
After longtime owner Hartmarx Corp. filed for bankruptcy in 2009, the British private equity firm Emerisque Brands and SKNL, an Indian clothing manufacturer, bought Hartmarx’s assets. Then the holding company they formed, HMX Acquisition Corp., itself filed for bankruptcy in 2012.
Months later, Authentic Brands Group LLC bought Hickey Freeman and turned running Hickey Freeman and sister clothier Hart Schaffner Marx over to W Diamond Group Corp., a private company created by HMX CEO Doug Williams and his wife.
W Diamond Group then sold the Hickey to Grano.
Granovsky said his company is committed to Rochester. “Hickey Freeman isn’t going anywhere,” he said.
The move to Hickey is part of Polo Ralph Lauren’s “Made in America” initiative whereby some of its production will be brought back to the United States, Schumer and Grano company officials said Monday.
The Blue Label brand has been manufactured in Italy. The deal and others to come could boost production and add up to 50 jobs in the next three years.
No one from Ralph Lauren attended Monday’s news conference at the factory on North Clinton Avenue in Rochester.
Granovsky said Lauren is bringing the jobs back from Italy because of the preference American shoppers have shown for products made in this country.
“When Ralph Lauren made the uniforms for the U.S. Olympic team, he became aware of the importance of American-made,” Granovsky said.
Lauren designed and made the uniforms and other clothing for the U.S. Winter Olympics team that competed this year in Sochi, Russia.
SOURCE: Democrat & Chronicle
