It may seem unlikely that the American manufacturing industry, which dates back to the 1700s, is at the forefront of a new socio-economic trend, but that’s exactly what’s happening.
Many forward-thinking manufacturers are seeing the benefits of “near-shoring,” which refers to when a manufacturer enjoying a period of growth decides to expand the business and create new jobs, and makes a strategic decision to keep them in the country rather than sending them abroad. A 2015 survey
of American manufacturing and distribution companies by AlixPartners shows an interest in near-shoring, with about 40 percent of executives surveyed noting that they’d already begun the process or expected to within two or three years.
Sending manufacturing business overseas, often to China, is still a viable way to work. However, some manufacturers have found that the negatives can outweigh the positives. High shipping costs, transportation Issues, damaged products, and the time spent managing these matters all factor into the true cost of offshore business.
More local jobs
There are many benefits to expanding in proximity to existing facilities. In most cases, the manufacturer already has established a working relationship with the region’s economic development representatives. In fact, there may even be tax incentives associated with adding more jobs to the local economy. At the very least, the company already has an understanding of how to do business locally, which can streamline the expansion process and avoid costly delays. In addition, companies here also can develop strong relationships with local suppliers and fulfill philanthropic responsibilities.
Operating additional facilities in the same region also helps a company maintain control and oversight with local resources, while avoiding the costs involved in running far-off facilities, especially ones on different continents.
For some companies, their expansion can be even more beneficial to the region by taking over an existing facility. When older structures become disused or abandoned, adaptive reuse can be the perfect way to breathe new life into an old building and a local economy, while conserving resources and containing costs.
Renovating an older building or building a new facility can spur hiring right off the bat, as facilities staff up to speed progress and meet production timelines. This impacts the local people and surrounding businesses nearly immediately. The company needs to be able to become functional in the space quickly, through capital projects and getting the right people on the team.
Hiring for rapid ramp-ups
As always in business, time is money. Once a company has established working operations (even if it’s only in part of a facility), it needs to get up to speed quickly to start generating the income to pay for the expansion.
Hiring and promotions can go from zero to 60 at that time. Facilities projects kick off, capital equipment is installed and finished product starts leaving the dock. Many times, cutting edge automated equipment along with people are the largest investments. The facility needs experienced people, often with specialized skillsets to get the equipment functional. It may require general construction and facilities maintenance, through operations-related positions in engineering, electrical/mechanical maintenance and production workers. They all need to be hired in a relatively short time period. Local facilities could also lead to promotion opportunities for the next tier of talent within organizations which leads to exciting development opportunities and a culture of investing in their own people.
Article by Steve Tannert
Senior Account Executive, Aerotek
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