April 25/May 2, 2016; Volume 30, Number 22
By Ken Ryan
For the first time in at least 20 years U.S. manufacturing has showed a net gain in jobs created domestically. That’s according to a study published by Reshoring Initiative, a Chicago-based firm, that found the net gain on reshoring (also called onshoring) and foreign investment in the U.S. was 67,000 jobs nationwide in 2015.
Since the low point in U.S. manufacturing jobs in February 2010, 249,000 jobs have been retained, added due to foreign investment or returned from overseas, the organization said in a release. Research shows 60,000 manufacturing jobs were added in the U.S. in 2014 vs. 12,000 in 2003, either through onshoring or foreign direct investment, in which foreign companies move production to the U.S.
Harry Moser, founder and president of Reshoring Initiative, said the trend in manufacturing in the U.S. is to source domestically. “With 3 million to 4 million manufacturing jobs still offshore, we see huge potential for growth.”
While there are several factors at play here, Moser—as well as others—said one big influencer is escalating wages in traditionally lower-cost countries, including China, have pushed companies to reconsider sourcing strategies.
U.S. flooring production rises
The national trend of onshoring is mirrored in the flooring industry. In 2014, several major flooring suppliers including Armstrong, Mannington, Mohawk and Shaw announced multi-million dollar investments in domestic LVT manufacturing. The full extent of this investment will likely be seen in the near term and beyond but is already bearing fruit as plants ramp up production.
April saw a flurry of activity on the domestic manufacturing front. Mohawk announced it will expand its existing vinyl flooring operations in Dalton with a $100 million infrastructure and equipment investment (see story on page 3). Executives estimate the expansion will generate approximately 200 jobs. Brian Carson, president of Mohawk Industries’ Flooring North America segment, said the company expects the Dalton LVT plant will be operating at full capacity by the end of 2016. Mannington, meanwhile, is opening its new manufacturing facility in Madison, Ga., this month.
The onshoring movement extends beyond LVT. Shaw Industries just announced completion of an expanded engineered hardwood flooring manufacturing facility in South Pittsburg, Tenn. (see story on page 3). The $40 million investment adds more than 60% capacity to the existing hardwood manufacturing facility as well as dozens of jobs as new equipment and production lines are utilized.
In 2014, Armstrong ceased production at an engineered hardwood facility in Kunshan, China, and moved manufacturing to two facilities in the U.S. The company also operates a hardwood production facility in West Plains, Mo. Don Maier, CEO of Armstrong Flooring, said recently the onshoring of manufacturing has been financially beneficial to the company. “We believe that gives us the best cost position and it brings jobs back to America.”
Boost in foreign investment
In line with domestic manufacturers bringing production back home, there has also been an uptick in foreign companies investing in plants in the U.S. Case in point is Nox, a leading Asian LVT manufacturer that opened a state-of-the-art manufacturing facility in Fostoria, Ohio, in 2015. The move makes Nox the first Asian producer to operate its own LVT facility in America.
Nox is investing tens of millions of dollars into modifying the space, which spans a little over 300,000 square feet. The plant will supplement the company’s primary manufacturing facility in South Korea. Nox will primarily operate as an OEM supplier; it struck a deal last year with Raskin Industries to produce the company’s new FloorNation LVT line.
The surging growth of LVT in the U.S. prompted Nox to get in the domestic game. “In the U.S., LVT now represents about 5% of the total flooring market and sales are projected to grow more than 15% annually through the end of the decade,” said Charles Kim, chief operations officer for Nox in Ohio.
Within three years Nox officials expect to have 150 workers, up from the 53 people currently employed at the company.
Nox is not alone. Two years after opening its U.S. production facilities, Del Conca USA, a subsidiary of Italy-based Del Conca Group, announced plans to double its capacity of porcelain tile production from 32 million to 65 million square feet per year. To date the U.S. plant, located in Loudon County, Tenn., covers 320,000 square feet. During the course of 2016 it will be expanded to 430,000 square feet and allow for the hiring of roughly 40 new employees to join the 85 people currently employed there.