the case for reshoring

The Reshoring Case

Sarma Vangala, PEng, PhD

Reshoring is the movement of manufacturing from China

back to the United States/Mexico/Canada.

Reshoring

Sarma’s

Bio

Past

Future

Examples

Reshoring

Reshoring is the movement of manufacturing from China

back to the United States/Mexico/Canada.

Reshoring

Sarma’s

Bio

Past

Future

Examples

Reshoring

Credentials

Reshoring

Past

Future

Examples

Sarma’s

Bio •! Professional engineer, university faculty and consultant to Fortune 1000 enterprises

•! Over 20 years of manufacturing technolgy transfer and supply chain experience gained in China

•! Established facilities for large US corporations •! Counsels enterprises on strategic sourcing, QA standards and optimisation of supply chains

•! Specialist in Oracle and SAP enterprise resource planning (ERP) implementations

China of the 1990’s

Reshoring

Sarma’s

Bio

Past

Future

Examples

20 yrs ago (1992) •! Large wage gap vis a vis US

•! Co-operative bureaucracy, attractive tax incentives •! Favourable exchange rate (USD1 = RMB10)

•! Keen, motivated labour force

China in 2016

Reshoring

Sarma’s

Bio

Past

Future

Examples

China 5 yrs from now (2018) •! Labour rate convergence

•! Supply chain and transportation costs marginally cheaper •! Increasingly opaque bureaucracy

•! RMB float against USD (USD1 estimated to be RMB5)

•! Unsustainable employee turnover

•! Workforce increasingly restive (a la 2010)

•! Stringent hukou (household registration system) enforcement •! Militant labour unions

•! Likelihood of increasing import tariffs by US

US in a few years from now

Reshoring

Sarma’s

Bio

Past

Future

Examples

US 5 years from now •! Incentives from individual states to attract investments

•! Federal incentives for some sectors, e.g., ‘green’ products •! Tax deferrals

•! Training and ‘’Earn as you learn’ programmes

Early adopters

Reshoring

Sarma’s

Bio

Past

Future

Examples

Anecdotal •! Nissan: Li-ion battery production reshored to Tennessee

•! Electrolux: reshored to Tennessee •! Yamaha Motor Corp: Transferred ATV production to Newnan, Georgia

•! Sleek, maker of professional grade earphones, moving its production back to US

Summary

Bio

Summary

Questions and answers

Bio

Q & A

Bio

Thank you.

Sarma Vangala sarma_vangala@yahoo.com

+1.416.567.0201 (mobile)