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Reshoring and Metalcasting: Why It Matters

A Modern Casting Staff Report
Click here to see this story as it appears in the July 2017 issue of Modern Casting

The year 2016 was another good one for reshoring.

According to data on the website of The Reshoring Initiative (, trends in U.S. reshoring and foreign direct investment (FDI) continued to increase. In 2016, a combination of reshoring and FDI brought 77,000 jobs to the U.S. economy. There was also a positive adjustment of 13,000 for 2010-2015.

“Reshoring and FDI together were up over 10% in 2016, with much of the increase coming in November and December, presumably due to anticipation of greater U.S. competitiveness following the election,” says the Reshoring Initiative 2016 data report.

“Similar to the last few years, FDI continued to exceed reshoring in terms of total jobs added, but reshoring increased at a higher rate than FDI from 2015 to 2016. Preliminary data from 2017 indicates similar trajectories, with an all-time high of reported jobs per month reported in January 2017.”

The report also has reasons for why reshoring and FDI is continuing to grow. One of them is skilled workforce, which “was reported as a reason at a much higher rate than in previous years.”

“The high ratings for skilled workforce are probably partly due to management wanting to recognize their team. It is also possible the rating is in comparison to developing country alternatives,” the report said. “Skilled workforce is receiving much needed attention and some improvements, but it is clear that our workforce recruiting and training are still not as effective as those in Germany, the source of much of the FDI.”

In general, the report said reshoring “is still in the early stages of a decades long trend” and that what happens in 2017 depends on federal policy changes.

“The recent upswing in activity is in response to anticipation of such changes, which are expected to positively impact U.S. competitiveness,” the report said. “If and when the policy changes occur, reshoring and FDI will accelerate.”

The Reshoring Initiative forecasts that in 2017, reshoring and FDI will be “flat to slightly up vs. 2016’s record level.”

“Other factors that will continue to influence jobs and the trade deficit include the strength of the U.S. dollar, relative to competitor countries. The strong USD and low oil prices hurt both trends, but probably hurt reshoring more than FDI as foreign companies act to increase their position in the strong U.S. market,” the report said. “In contrast, U.S. companies are still largely making sourcing decisions on an ex-works price basis. There is probably a 12-month lag time between these economic changes and a significant response in the trends.

“Balancing those headwinds, reshoring and FDI continue to gain credibility. Companies are becoming more aware of TCO (Total Cost of Ownership), and skilled workforce recruitment and training are improving. In conclusion, we have moderate confidence that policy changes and increased use of TCO will balance low oil prices and high USD.”

To get more information on reshoring and how it can be useful to metalcasters, Modern Casting spoke with Harry Moser, the founder of the Reshoring Initiative.

Modern Casting: What Is the Reshoring Initiative?
Harry Moser: The Reshoring Initiative is a not-for-profit with a mission to bring manufacturing jobs back to the U.S. or, secondarily, to North America. We accomplish that mission by documenting the trend so it is visible and credible, promoting the trend via presentations, articles, interviews, TV, and other media, and enabling the trend via the Total Cost of Ownership Estimator and by helping companies and associations to reshore.

MC: Why is it relevant to metalcasters?
HM: The foundry industry has lost a lot of production to imports. About 20% of the market is supplied directly by imports of castings. Very roughly, another 25% was lost due to the trade deficit in products that contain castings. So, maybe 40% total loss to imports.

MC: How can metalcasters help achieve the Initiative’s mission?
HM: There are many ways metalcasters can achieve this. They can report cases of reshoring to demonstrate that the industry is competitive. Another option is to use the TCO Estimator as a sales tool when competing with imports. Metalcasters can also automate, train and achieve the quickest possible delivery times.

MC: What kind of impact could the American Iron and Steel Act have on reshoring?
HM: No idea. I would think quite positive. I hear a lot about lack of U.S. capacity for large castings. The act should make investment in large casting capacity more feasible.

MC: How can reshoring help a metalcaster thrive during a
strong economy?
HM: Reshoring can help overcome some of the pricing constraints due to imports. Metalcasters should sell based on TCO wherever possible and, when the economy is strong, try to shift their sales mix to customers that are progressive enough to understand TCO.

MC: And how can reshoring help a metalcaster thrive during a weaker economy?
HM: Metalcasters would retain more of what would be lost to offshore. It would take share away from imports, and casters would feel confident enough to continue investing and training.

MC: Why would buyers want to bother with reshoring?
HM: That would allow them to consider their sourcing decisions’ total impact on their company’s P&L and balance sheet, both in the short- and long-term. They could represent the interests of all departments instead of acting in a silo optimizing price while ignoring the impacts on quality, delivery, innovation, sales, travel and other factors. The supply chain is trying to claim a seat in the C-suite. By taking a more holistic approach, they can help justify the seat.

MC: What is the process for buyers of reshoring? How do they come back?
HM: Ideally, the buyer should identify the castings that are causing problems of delivery, quality, travel, excess inventory and other issues. Use the TCO Estimator to decide which to source domestically. Then there are logistical considerations: planning the transition, shifting the tooling, etc. Start with making the right decision on new products.

MC: Please explain the Total Cost of Ownership assessment.
HM: The user answers questions about each source. The TCO Estimator uses this input data to quantify 30 costs, risks, and strategic factors, which are then added to create the total cost. The software then projects the TCO for each source for five years based on forecasts for wage increases and currency changes.

MC: What are some benefits of the TCO?
HM: The company starts to recognize the many “hidden costs,” the costs, risks and strategic impacts they typically ignored when they offshored. By doing so, the interests of all departments of the company are represented, rather than having these other costs disappear into overhead.

MC: There are 30 cost factors for each source. What are some key examples?
HM: Freight, duty, carrying cost of inventory, travel cost, impact on innovation when engineering and manufacturing are close to each other and speak the same language, lost orders due to offshore inability to respond timely to order volatility, and the benefit of a Made in USA label.

MC: Who are some examples of successful reshoring?
HM: GE reshored appliance assembly to Appliance Park in Louisville, Kentucky from a contract manufacturer in China. Engineering and manufacturing redesigned the product, reducing warranty costs, increasing thermal efficiency and reducing the retail price despite the higher U.S. wages.

Morey Corp. an EMS (Electronic Manufacturing Services) contract manufacturer in Woodridge, Illinois used the TCO Estimator to convince a U.S. customer that even though Morey’s price was higher, its TCO was lower than a Chinese competitor’s. It saved a $60 million order.

Hubbardton Forge uses the TCO Estimator to decide where to source die castings. They find it worth analyzing if the Chinese price is as much as 50% below the U.S. price.

MC: How can members of the industry share their reshoring successes?
HM: They can enter the First National Reshoring Award competition. The due date to apply is September 1, 2017.

MC: You founded the Reshoring Initiative in 2010. What have the last seven years been like for you as you promote reshoring and the Initiative?
HM: It has been great. We are credited with a key role in launching the trend which has taken the country from an annual net loss to offshoring of about 220,000 manufacturing jobs in 2000 to a net gain of over 20,000 manufacturing jobs in 2016. We appreciate the support of our sponsors, including AFS, that have made our success possible and made reshoring a well-accepted trend.   

For more information on the Initiative, visit
And for the TCO go to

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