Posted at 6:30 AM
Created on April 10, 2013
I have the pleasure of meeting frequently with business owners from across the country. They talk about where their challenges are in growing and sustaining their businesses, and they also talk about how locating production abroad hasn’t always turned out as well as they had hoped. Not surprisingly, during our current economic recovery and expansion, news reports and private consultants have repeatedly echoed that thinking. Increasingly we hear that U.S. companies that previously took their operations or supply chains overseas are now reshoring or insourcingbringing operations and supply chains back home to America.
To help continue that momentum, the Department of Commerce today published a new tool to help inform manufacturing firms’ location decisions. The Assess Costs Everywhere (ACE) tool outlines the wide range of costs and risks associated with offshore production, and provides links to important public and private resources, so that firms can more accurately assess the total cost of operating overseas. ACE also shares case studies of firms that reversed their decisions to locate offshore once the full range of costs became clear.
ACE counts as its sponsor and most ardent champion, U.S. Representative Frank R. Wolf (R-VA), who directed the Department of Commerce to build an online tool for businesses to use in assessing hidden costs to manufacturing offshore. Congressman Wolf saw ACE as a much-needed resource in the federal government’s efforts to help achieve our goals of boosting U.S. economic growth and ensuring that America remains competitive in manufacturing.
ACE identifies and discusses 10 cost and risk factors that firms should weigh in their decision making, such as labor and shipping costs. Although some of these factors may seem obvious, companies may not always take all of them into full account. Over the coming weeks, the Commerce Department’s blog will examine each of the areas, and although I hate to be a spoiler, it does turn out that the United States tends to compare quite favorably. Having said that, there are many areas in which the U.S. needs to make critical investments. The Competitiveness and Innovative Capacity of the United States, a report published by the Commerce Department’s Economic and Statistics Administration in January 2012, examined three key components of our nation’s competitiveness—research, education, and infrastructure. The report concludes that in the manufacturing sector, the federal government has historically played an important role in providing a level playing field and must do so with renewed vigor to ensure that U.S. manufacturing continues to thrive.
The ACE tool assists in those efforts by providing a framework to consider total costs. It serves as a portal to data that companies can use to start doing their own assessment; it includes an industry-developed calculator, and it presents a list of useful assets right here in the Department of Commerce. One example is the Manufacturing Extension Partnership (MEP), which is part of the DOC’s National Institute of Standards and Technology. Through its nationwide network of field centers and its 1,300-member technical field staff, MEP can help companies more accurately assess their total cost of offshoring. Furthermore, MEP educates small- and medium-sized manufacturers and provides tools, services and connections focused on five key areas: continuous improvement, technology acceleration, supply chain development, sustainability, and workforce.
In the current economic expansion, we have witnessed a welcome resurgence in the U.S. manufacturing sector. More than half a million manufacturing jobs have been created -- many undoubtedly because domestic and foreign firms have realized the low costs and risks associated with locating in the United States.
Guest blog post by Mark Doms, Under Secretary of Commerce for Economic Affairs