Management: How to Make It in America
Meet Harry Moser, the 2012 Quality Professional of the Year and manufacturing’s biggest fan. He’s making a case for making things here.
On his way to meet the president a few months ago, Harry Moser made sure to wear a suit coat on the plane in case his luggage got lost. But in his focus on what to wear, he forgot his laptop-and the presentation that was on it. Luckily, his wife was able to drive to Chicago’s O’Hare airport to drop it off.
Once he got to Washington, Moser worked until midnight to prepare for the next day’s event. Though he doesn’t often meet with one of the most powerful men in the world, Moser does travel a lot. Last year he spoke at more than 100 events around the country. In addition, he’s been interviewed by The Wall Street Journal, Bloomberg and USA Today as well as Le Monde and Japanese radio.
Moser wants to bring manufacturing jobs back to the United States, which isn’t as impossible as it might sound. A few years ago, people may have called Moser crazy-some still do-but today he is part of a vocal movement that says we can still make things in America.
For his work in promoting American manufacturing, Harry Moser earned the title 2012 Quality Professional of the Year.
America, the Manufacturer
“When the other kids were at the beach, I was at the factory,” says Moser, 68. He grew up in a Singer Sewing family. Both his father and grandfather worked at the Singer Sewing factory in Elizabeth, N.J., which employed thousands before closing in 1982. Though an enormous sewing machine factory is unlikely to return to the United States, Moser believes that it is possible to bring some manufacturing jobs back to the U.S. and it’s the foundation of the Reshoring Initiative he launched two years ago. Whether you call it reshoring, on-shoring, near-shoring or insourcing, the main idea is that companies source things close to their markets. It’s the opposite of offshoring.
“To me, manufacturing is the sine qua non of the economy,” Moser says. “Without it, it’s nothing.”
And experts agree. Howard Wial, a fellow for the Metropolitan Policy Program of the Brookings Institution (Washington, D.C.), has written articles such as “Manufacturing is Special: Why America Needs Its Makers.” “Manufacturing still accounts for the bulk of U.S. trade,” says Wial, and it is difficult to balance the $558 billion trade deficit without it. And while the country previously focused on real estate and financial services to drive the economy, that has changed. This growing attention to manufacturing can be attributed to benefits such as innovation and high wage jobs.
Manufacturing has been dismissed before. In the 1970s, Americans thought Japan would wipe out manufacturing in the United States. “People thought the U.S. was going to be a land of farmers and bankers,” says Harold Sirkin, Chicago-based senior partner and managing director of the Boston Consulting Group who studies the issue.
But today, manufacturing seems to be having a moment. Companies like GE, BMW, Nissan, Caterpillar, Union Pacific and Ford have recently built factories or expanded production in the United States. With the weak dollar and rising wages in China, companies have considered that they should make products closer to their customers. In a recent Accenture survey, 61% of respondents reported that they were considering near-shoring.
This is not done for patriotic reasons. If companies lose money by making products in America, it is not a success story. But with current exchange rates, suddenly America looks like a great place to build a new plant. “To Europe, America is a pseudo-low-cost country,” says Mitch Free, founder and chief executive officer of MFG.com (Atlanta), a marketplace for manufacturing. By making cars in the U.S. for the market here, it means they don’t have to be shipped over from Germany. “Likewise, there are American companies that it makes sense for them to manufacture in Brazil, Taiwan, South Korea, where the products are used,” Free says.
Moser understands this. But he still wants companies to at least consider the advantage of building new products in the United States.
Last year Moser gave 105 presentations describing his Total Cost of Ownership calculator, a spreadsheet that encourages businesses to examine all of the costs surrounding offshoring.
The initiative started after he retired as president of Lincolnshire, IL-based GF AgieCharmilles-but he has always been interested. “Harry is a pit bull,” says Douglas Woods, the president of the Association for Manufacturing Technology who has known Moser for about 25 years. “You get him on a topic he’s passionate about, you can’t get him off it.”
Moser has been passionate about manufacturing from an early age. He graduated from the Massachusetts Institute of Technology with a bachelor’s degree in mechanical engineering and a master’s in engineering in 1967, and received his MBA from the University of Chicago in 1981. He started his career at GE, went back to M.I.T. for a position in their liaison office (a good fit for an engineer who liked to talk) then to Disamatic Inc. in Burr Ridge, IL; Acme-Cleveland Corp. in Ohio; and Roto-Finish Company in Kalamazoo, MI. From there it was on to Charmilles Technologies Manufacturing Corp. in Ann Arbor, MI, where he became president of that division and eventually of the entire GF AgieCharmilles. There he oversaw a 500% increase in sales, taking the company to the number-one position (from sixth) in the North American electrical discharge machining (EDM) market.
In 2010, he was inducted into Industry Week’s Manufacturing Hall of Fame-joining people such as Jack Welch, Steve Jobs and Lee Iacocca-retired, and founded the Reshoring Initiative. Today Moser speaks out about reshoring to anyone who will listen. And during the dozens of speeches Moser gives each year, people do listen.
Jeff Jaje, marketing and business development manager of Sescoi USA (Southfield, MI), a software company and one of the Reshoring Initiative’s sponsors, says, “He can speak their language. The room can have a lot of different people in it, and everyone knows what he’s saying.”
John Belzer, president of TCI Precision (Gardena, CA), another sponsor, says, “If I had to pick anybody to do the Reshoring Initiative from the industry, he’s the guy that I would pick. You couldn’t pick a better guy. I don’t know if I’ve ever known anybody who works as hard as Harry.”
He recalls a flight from Hartford, CT, to Chicago, where the two of them ended up on the same plane. Moser had gotten the last seat on standby, and Belzer happened to walk by him, scrunched into the last row of the small plane. Though they had both been in meetings all day, there was Moser, furiously typing away on the computer. Belzer asked him, “Do you ever stop working?” Moser replied, “Why would I want to do that?”
Location, Location, Location
Though Moser has a lot of work ahead before a huge number of manufacturing jobs come back, he has picked a good time to do this. John Ferreira, executive director of Accenture’s North American manufacturing practice and co-author of a recent report, “Manufacturing’s Secret Shift: Gaining Competitive Advantage by Getting Closer to the Customer,” has seen manufacturers belatedly realize the costs of offshoring. One, a semiconductor manufacturer, decided to move to Asia because of a growing customer need there, and lower labor costs. But the manufacturer soon realized he had to manage a much more complex operation, including adding a sub-assembly operation, and wasn’t able to forecast what the customer will need. He told Ferreira, “I think my costs have gone up and my response times have gone down.”
Ferreira says the idea is that companies should produce near their markets. “I do think the long-term trend is this rebalancing regional supply to regional demand will result in many jobs coming back to the U.S.,” he says. But, “You don’t just change your supply chain and manufacturing network overnight.”
The Boston Consulting Group’s Harold Sirkin, author of “Globality: Competing with Everyone from Everywhere for Everything,” had found himself in a board meeting with a company that had about 80% of their manufacturing operations in China and wanted to build another plant there. It was assumed that a factory should be located in China, and he decided to look into it. While offshoring may have made financial sense ten years ago, for some companies it might warrant rethinking.
Wages in China are rising faster than productivity. While there are other low wage countries that could step in, including Vietnam and Thailand, this doesn’t take care of the problem. “China isn’t the only game in town, but many of the costs of offshoring apply to them too,” says Howard Wial of Brookings. “Offshoring costs more than it seems to at first pass.”
Though it is easy to measure the cost of labor, that might be only a small cost. It is more difficult to measure the costs to quality, transportation and intellectual property risks. Companies have to consider the lag time of producing something that will be on the water for weeks; working overseas might require a special trade credit arrangement; and companies may want to buy enough to fill a shipping container, but then they will have to pay more, possibly taking out a bond to insure the items.
For products in development, it helps to have production near the research and development team, and a far-flung supply chain is more vulnerable to interruption. “It was hard to figure these costs into these decision making models, whether to offshore or not. Back into the late ‘90s, they couldn’t or didn’t have a good way of measuring them,” Wial says. Today, he says, “Reshoring is part of an overall strategy of U.S. trade that is essential in the long run and could be helpful in the short run in creating jobs.”
As chief executive officer of the Alliance for American Manufacturing (Washington, D.C.), Scott Paul would love to see more jobs here, and praised Moser as the “evangelist for insourcing.” But he says Moser needs public policy support: the United States must determine how to make the country more attractive for manufacturers. Despite the increased attention given to the subject, Paul warns that there has not been a surge of jobs returning to the United States, explaining the situation this way: “It’s like looking at a checkbook but only counting the deposits.”
Robert Scott, director of trade and manufacturing policy research at the Economic Policy Institute (Washington, D.C.), says he respects Moser’s work. “But what we have to recognize is that he is swimming upstream,” Scott says.
The solution for manufacturers, says Mitch Free of MFG.com, is to consider where customers are, and what they want.
“If the advantage of your product is that it’s cheaper, you’ll never bring it back to the U.S.,” Free says. But if your advantage is that your product is customized and available for a premium, “Those companies can get away with not having to worry about producing for lowest cost and lowest value.”
The Supply Chain in Action
Steven Wiegers, the supply chain manager of Hubbardton Forge (Castleton, VT), says the company sources about 70% of its 8,000 active parts in the United States. But some supplies aren’t available here, and some suppliers don’t understand their competitive advantage in the United States, he says. These include short lead times, a faster response and low-volume, high-customization product runs.
“As an American manufacturer of lighting, it’s important to us to keep that Made in America feel to it. We didn’t want ourselves drifting towards more components being made offshore,” Wiegers says. “Different parts that would have just gone over there, now in many cases might stay here. That’s what’s really on the board. This tool is going to help us keep more components close by rather than far away.”
And the more companies that think like that, the happier Moser will be.
Mr. Moser Goes to Washington
Moser ended up at the White House only a few months after formally incorporating his Reshoring Initiative. This January, he met with President Barack Obama, Vice President Joe Biden and the Secretaries of Labor and Commerce, along with 15 presidents and vice presidents of companies. Moser presented his calculations comparing the cost of doing business in China to the United States. Though the U.S. price was initially higher, in most of the cases, the total costs showed that the product would be cheaper made in the U.S. Moser only found out he would be speaking at the event at 11 a.m. the day before, and spent the night before the event crunching numbers.
But it seems to have worked. Manufacturing was highlighted in the State of the Union address two weeks later. President Obama noted that the auto industry had turned around: “What’s happening in Detroit can happen in other industries. It can happen in Cleveland and Pittsburgh and Raleigh. We can’t bring every job back that’s left our shore. But right now, it’s getting more expensive to do business in places like China. Meanwhile, America is more productive,” said the President. “So we have a huge opportunity, at this moment, to bring manufacturing back. But we have to seize it. Tonight, my message to business leaders is simple: Ask yourselves what you can do to bring jobs back to your country, and your country will do everything we can to help you succeed.”
A Sense of Satisfaction
Moser, a former marathon runner and tennis player, spends more than 70 hours a week on his reshoring mission in addition to working out for about two hours a day. When people at the health club ask him what he does, he replies, “Bringing back manufacturing jobs to America.” Their response: “You have the most important job in the country.”
Though he watches CNBC and Bloomberg, Moser, who has a son and two grandchildren, aims to spend his retirement on TV rather than in front of it. “I think what we’re doing is absolutely necessary for the United States, our children and grandchildren,” says Moser.
Moser’s father died a few years ago. But Moser continues working in memory of the man who worked at one company his entire career. When he sent articles about his roundtable with the White House to his sister, she knew what their father would think. She told him: “Dad would be so proud.” Q
Michelle Bangert is the Managing editor of Quality Magazine. For more information, visit www.reshorenow.org
Reshore More: Suggestions from Harry Moser
Promote use of Total Cost of Ownership in your company.
Use our email template to encourage your customers to use this total cost calculator.
Use the posting template to post your cases of successful reshoring.
Post a link to the Reshoring Initiative. Let us convince your customers to reshore.
More information available at www.reshorenow.org
Master Lock in Milwaukee
If the name Master Lock sounds familiar, it might be because they were mentioned three times in the State of the Union address. President Obama applauded the company for bringing jobs back to the United States, and visited the plant a few weeks later.
The manufacturer began offshoring jobs to China in the late 1990s, but has brought 100 jobs back to Milwaukee since 2010. “I think the biggest thing is the competitive landscape in China has definitely changed,” says Bob Rice, senior vice president of global supply chain, citing the higher labor and logistics costs and, even in a country of 1.3 billion people, a labor shortage. Previously workers from China’s interior would head to the coast for jobs, but now with other large plants in the interior, they no longer need to do so. While the company also faces a limited pool of skilled workers in Milwaukee, it offers training and apprenticeships.
Companies may not realize the pitfalls of manufacturing products faraway, but Moser’s calculator explains it. “His spreadsheet is actually the cost picture that you need to look at,” Rice says. Though the jobs began returning in 2010, Master Lock has always tried to take a variety of factors into consideration in its supply chain. “I think quality is always the biggest one,” Rice says.