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Wood: ‘Reshoring’ trend gains traction in U.S.

Jan 18/25; Volume 30/Number 15

By Reginald Tucker

Screen Shot 2016-01-18 at 2.41.17 PMFor decades, economists and industry analysts have documented the mass exodus of hundreds of thousands of manufacturing jobs from America to China as well as other countries as a result of drastic cost-saving initiatives and fierce competition. But in recent years, industry observers have seen an incremental, albeit steady, return of those same jobs back to America as domestic companies reevaluate the cost-benefit equation of outsourcing production.

This phenomenon, often referred to as “reshoring,” is taking place across a diverse range of markets and industries, including hardwood flooring. Industry members report the benefits of keeping hardwood production stateside (i.e., faster delivery times, lower inventory commitments, increased quality controls, closer proximity to resources and R&D) vastly outweigh the once-significant labor and material cost savings achieved by moving production offshore.

A case in point was the decision by Kentucky-based Somerset Hardwood Flooring to discontinue sourcing of its engineered flooring products from China and instead construct a state-of-the-art plant dedicated to producing engineered hardwood products in its own backyard. At the time it was considered a bold move for Somerset, and the industry took notice. Elias Wilf Distributing realized a dramatic difference when Somerset began producing its new engineered products right here at home. Although the decision entailed millions of dollars in capital investments to build a modernized, state-of-the-art plant in Crossville, Tenn., the expenditures were worth the risk.

“When Somerset moved its engineered production from China to the U.S., it was a fundamental change based on the quality of what they were getting there vs. what they could make stateside,” Jeff Striegel, president of Elias Wilf, told FCNews.

For Somerset, the decision to reshore production of the once-outsourced engineered line meant making a strong statement to distributor partners, the industry and consumers. “We manage the raw materials and supply chain from the forest to the finished flooring, and we are personally involved in all aspects of quality control,” said Steve Merrick, Somerset president and CEO.

Another exemplary reshoring case study entails Adairsville, Ga.-based MaxWoods. After dealing with issues from its mill source in China (namely costly air freight charges, long lead times, delays in sample development and problems with subcontractors hired by the Chinese mills), MaxWoods turned to American OEM, a domestic supplier, for help. Launched in 2014 by Don Finkell, former president of Anderson Hardwood Floors, American OEM stepped in and put together a complete program for MaxWoods that not only entailed product and inventory but also sample development, merchandising and customer service support (FCNews, Jan. 4/11).

Some U.S. manufacturing advocacy groups and associations that closely track reshoring activity are convinced the trend is not only real but also sustainable over the long term. One such agency is The Reshore Initiative, which promotes factory-location choices in the U.S. By the group’s count, approximately 60,000 U.S. manufacturing jobs were created in 2014 as a result of reshoring and foreign direct investment.

Bolstering its statistics is research showing there are more than 800 documented cases of companies that have chosen to manufacture certain products in the U.S. as opposed to moving production offshore. Among the firms on that list are some household names like GE Appliances, Ashley Furniture Industries, Armstrong World Industries, Lexus and even Wal-Mart.

While some critics of the Reshore Initiative say the organization has a vested interest in promoting outcomes that support increased reshoring activity, the group argues that its primary objective is to “bring good, well-paying manufacturing jobs back to the United States” by helping companies more accurately assess their total cost of offshoring. Other analysts, however, feel the so-called reshoring trend is actually not happening at the accelerated rate the Initiative contends. In fact, according to the second annual A.T. Kearney U.S. Reshoring Index, the pace of the return of manufacturing operations to the U.S. continually fails to match that of offshoring.

Both the Reshore Initiative and A.T. Kearney, however, believe manufacturing in the U.S. is still in decent shape.