First Person: How One Regional Supplier is Investing to Meet the Demands of Reshoring OEM Customers
Area Development speaks with Noel Ginsburg, CEO and President of Intertech Plastics, about the reshoring trend, why OEMs are returning to the U.S. to manufacture their goods, and the impact that’s having on his business.
Noel Ginsburg, CEO & President, Intertech Plastics (Q2 / Spring 2013)
AD: Why did so many manufacturers move their manufacturing offshore in the first place?
Ginsburg: Originally, they moved for lower costs. It was all cost-related. For many that started 10–15 years ago, and it became a big trend to manufacture in low-cost countries. Everyone wanted the “China price,” and to be competitive, they had to go there.
AD: That seems to be changing. We’re hearing a lot about the reshoring of manufacturing from China and other Asian countries. Is this trend a reality? And how has it impacted your particular business?
Ginsburg: It’s absolutely a reality. We’re a turnkey solutions provider, which means we not only mold parts, but we provide decorating, printing and labeling, assembling, packaging, and distribution. That’s the value of being a regional supplier — a shorter supply chain that can provide a range of services. Last year, due to several customers moving their manufacturing back to the U.S., we invested $2 million in new injection molding equipment and auxiliary equipment.
AD: Why do you think your customers have come back to the U.S. to engage with Intertech as a supplier?
Ginsburg: It’s really twofold. First, these OEMs are experiencing increased costs in China, such as double-digit rising wages along with the other costs of infrastructure. Transportation logistics are also problematic and the costs involved with shipping have escalated.
AD: Can you give us an example?
Ginsburg: One customer was spending a million dollars a month to fly parts in from Asia. When they looked at their cost structure of manufacturing offshore versus what they can get [parts] for from a local supplier, the decision was easy. They have now reshored 70 percent of their product line. It’s simple math. When our customers account for their total cost of doing business, we are now very competitive with China and other Asian suppliers.
AD: Are there any reasons to reshore besides cost?
Ginsburg: Speed-to-market is another big one, but it’s cost-related as well. As the world moves forward and advances, time-to-market becomes part of the cost equation.
AD: Has the resurgence of ‘”Made in the USA” had any influence on manufacturers bringing manufacturing back to the U.S.?
Ginsburg: Yes it has. One customer that serves big-box retailers is moving manufacturing back in response to Walmart’s “Made in America” initiative. Another customer moved all their molding offshore and they’re also responding to Walmart by saying, “We can make it in the USA and be cost-competitive.” Let’s face it, though — no one would be doing this if it didn’t make sense from the cost perspective.
AD: Nonetheless, do you believe that consumers really care about the “Made in the USA” label?
Ginsburg: You bet they do! I can tell you the pride that one of our customers felt when they reshored 70 percent of their molding and were able to create jobs when they came back. People do care. We don’t want to see our neighbors out of work. This reshoring trend isn’t about philanthropy — it’s about building a strong economy and about people working. If they can buy something made in the USA and it’s only 1–2 percent more, they’ll buy it. And more and more we’re seeing prices equal to the China price.
AD: Do you think the government and manufacturing trade organizations are doing enough to encourage the trend going forward?
Ginsburg:I’m involved with the Manufacturing Initiative of the National Governor’s Association, which is doing a lot to promote reshoring by helping to modernize manufacturing in America. However, the government is beginning to realize that if we make everything overseas, the total cost to our country is greater than just the cost to go offshore. We’ve lost jobs and consumer confidence. But if we have policies that incentivize bringing manufacturing back, we’ll have a healthy economy. This is really important because the social cost of unemployment is massive.
AD: How has this reshoring trend and your subsequent business expansion helped your business?
Ginsburg: The expansion allows Intertech to support our customers’ requirements for high-volume production, warehousing, and distribution to the western United States, within a cost structure that keeps the company competitive in a global marketplace. We’re investing in our plant and our employees. Combine that with the fact that the American worker is up to three times more productive than their Chinese counterpart, and this means we are competing successfully.