Renaissance Reshoring

As described in our 2020 Reshoring and 2024 Renaissance articles, Reshoring is not new.  The need, enthusiasm and success of Reshoring is troubled, hindered or thwarted by similar forces as the Dark Ages and fall of the Roman Empire.

“Forces that led to the fall of the Roman Empire and existed in the Dark Ages including political chaos, government corruption and inefficiency, government taxation and regulation, devaluation of currency, crime, workforce quality and scarcity and accountability issues, supply chain challenges, geopolitical threats, pestilence and disease, and (in some cases) invasion. “  TMG Business Renaissance

Reshoring still succeeds.

Roadmaps include:

Renaissance Merchants, Crafts and Businesses – 1400-1600

Trade to Reshoring- They Reshored

  • “In exchange for Eastern imports the West had to export either raw products or manufactured goods. The importation of the products of the Eastern industry furnished models and an incentive to Western craftsmen, and the profits of Eastern trade began to furnish capital for the development of Western industry. In many lines the West had to make goods formerly imported from the east – textiles, draperies, carpets, furniture, enamels, and glass. Western products soon equaled Eastern products in excellence.  Finally, they surpassed them and drove them off the Western market.”

The Renaissance Businesses

  • Captured the vision to create, and innovate, goods and services, and grow
  • Formed partnerships of with other businesses including Suppliers.
  • Create new supply chains and shipping/ transportation services.
  • Optimized operations, production, quality and delivery to reduce costs.

The Roaring Twenties- President Coolidge and Andrew Mellon- 1929

Coolidge served as President from 1923 to 1929. Coolidge repaired the damage done by President Harding, and helped the US recover from the Great War (WW1), last global pandemic (Spanish Flu), and collapse of the fledgling German republic, all which caused major global economic disruption. The Roaring Twenties resulted. How and why? Coolidge took on the progressive Goliath, both Republican and Democratic, and won. He demonstrated incontrovertibly the U.S. will prosper as a nation and as individuals as long as we

  • Hold fast to our principles of individual liberty, responsibility, and limited government,
  • Cut government expenditures/ size of government, and
  • Fuel commerce.

Thanks to Andrew Mellon’s (his Secretary of his Treasury) theory of “scientific taxation”, Coolidge slashed the highest marginal income tax rates from 58% to 25%.   When business and individual tax rates were reduced investors and business owners reshored their money and businesses.  New businesses nucleated and grew rapidly.  Because of the growth in the economy, the total amount of tax revenue increased dramatically. Coolidge held firm on reducing government expenditures, so his budget was always in surplus.  He paid off one third of the national debt.

Coolidge/Mellon – US Debt Decrease 37%

Coolidge’s policies set the stage for unprecedented economic growth.  Manufacturing output went up by a third, iron and steel production doubled, Americans wired their homes for electricity, bought their first cars and flew in their first commercial airplanes.  According to historian David Greenberg, “When Coolidge was “Every bit as much an icon of his age as Charles Lindbergh, Babe Ruth, Charlie Chaplin. “  He had accomplished to return America to prosperity built on individual freedom and constitutionally limited government.

Obama Administration

Despite Obama’s and previous administrations efforts to offshore production, jobs and growth, businesses began to Reshore in earnest.  In 2012 The Wall Street Journal (WSJ) published a weathervane report regarding the new wave of reshoring, about the time I gave my first talk on the topic.  Reshoring articles.

Whirlpool/ Kitchen Aid, Char-Broil, Otis Elevator, Caterpillar, General Electric and Ford Motor company were reshoring based on doing the math and making process improvements.   “For Whirlpool, the decision to assemble hand mixers in the US was based on complicated calculations that varies for every manufacturer contemplating reshoring:  the amount of money it saves on shipping and inventory, for example, off sets the higher wages it pays American workers.  It also was able to use an existing US factory and further automate its assembly line.”

The calculations were not complicated.  They were based on Value Stream Cost Accounting or Lean Accounting.  These discovered it was not more profitable to make certain products offshore.  They were able to make products in the U.S.A. with more profit, less lead time, minimized risk, and greater customer satisfaction. Read More.

Trump and Biden Administration

In 2020, US companies were anticipating moving forward with Reshoring bringing manufacturing and jobs back to the US, improving the U.S. self-sufficiency, as well as the quality and delivery of products and services.  Trump was promising to deliver American industry with fair tariffs and incentives to Reshore, as he had already accomplished.

In 2019 The Economist published the latest trends and factors, costs and risks driving Reshoring including: Read More

  • The lack of wisdom of hyper globalization uncovered by true cost accounting
  • Planning and the wisdom of shorter, smarter, and faster supply chains to meet customer demands
  • Benefits of reduced inventory and cheaper logistics, shorter cycle times by suppliers being closer to consumers
  • Risk- Supplier, political, tariffs and trade agreements, and the Chinese New Year
  • China’s increasing labor and related costs
  • Customer demands for higher quality and more diverse products
  • Expansion of customization and the acceleration of innovation

However, Biden took the presidency.  The risks and realities of offshoring became very painful to Consumers, manufacturers and service providers.  Because of it many businesses closed or were acquired.  COVID-19 brought these hidden risks and realities to light, in a big, immediate, and painful way.

New Trump Administration and Reshoring

Will the Trump Administration be able to keep its promises to deliver American industry with fair tariffs and incentives to Reshore?  Will Reshoring kick into high gear? Rumor has it that Investors are already starting to move money to US shores, like they did under Calvin Coolidge.

Based on his previous track record, the answer is yes.  Some of his knowledgeable skeptics, the answer is not so clear.  “We don’t really know yet.” Catherine Austin Fitts Solari Report

Offshoring is a 30-year-old paradigm and model, entrenched in assumptions, propaganda and habit of consumers and businesses.  Trump and businesses have an uphill battle against forces that were exposed during and following Covid.

Reshoring and near shoring will be a challenge and opportunity.  Businesses will need to actively participate in order to survive and thrive, understanding there is no government savior but Business and Individuals themselves.

Regionalization

Reshoring enables businesses to take a fresh look for suppliers and supply chains in a region.  How do manufacturers and service providers find and qualify suppliers?  What new marketing, social media and sales approaches are needed?  What is the role of partnerships?

The Inland NW is a hot bed of organizations and partnerships bringing new enthusiasm around sustaining, relocating/ reshoring and growing small and medium size businesses. The Mervyn Group is a founding member of two of these organizations and partnerships.

The Mervyn Group

Is your organization ready to relocate, reshore, grow or transition? Can your company run without the owner/ CEO?  The Mervyn Group can assist by improving systems and processes to maximize value and profit for growth or transition.

We provide full-service Business and Process Engineering Solutions including

  • Reshoring/ near shoring evaluation, improvements and transition management.
  • Supply chain and procurement strategies and partnerships development.
  • Manufacturing and service start up planning and implementation.
  • Sales and market sector assessment, planning, and implementation for growth.
  • New product introduction and design engineering controls.
  • Business management and quality systems implementation to ISO and AS standards.
  • Manufacturing and service Operations Excellence including Lean and IT system development.

Gaps and inefficiency in these systems and processes drain or profitability and margin are often overlooked in projecting for growth or merger or transactions.   Cost associated with these elements are significant. We quantify and prioritize these improvements and help you implement.

We lead and facilitate, hand in hand/ partner with the organization to ensure the improvements are implemented and actualized. We deliver with you to the finish line.

To Learn More Contact Debra Mervyn- Debra@MervynGroup.com