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This Week in Manufacturing: Reshoring Initiative, and Worker Shortage in the Construction Industry

This Week in Manufacturing: Reshoring Initiative, and Worker Shortage in the Construction Industry

Video of the week: Why some manufacturers are returning to the U.S.

Let’s start this week with a success story from America’s Oldest Hat Maker: Bollman Hat.

The company, created in 1868, has manufactured everything from fedoras to cowboy hats, and to this day you can still buy their 1880’s Collection Topper on their website. But in the light of recent initiatives, what is particularly interesting about Bollman is their strategic move to successfully reshore their activities.
In 2014, when the Chinese manufacture that produces one of its collection, the Kangol Hats, wants to move the production to Bangladesh to find cheaper wages, the new owner of the company bought and shipped the old Kangol knitting machines from China to Adams Town.
While some of Kangol hats are still manufactured in China, the owner explains that US based production looks increasingly attractive. “If we get to the same efficiency levels that we had in Asia using labor rates, our costs are very close. We don’t have to transport the product and over time as labor rates continue to rise in other parts of the world at a fairest rate as they are here in America, it will actually become cost competitive to do it here” he said.

This type of strategy does not surprise Harry Moser, founder of  the Reshoring initiative. He believes that increase wages make it difficult to justify the other costs associated with offshoring like shipping, delivery delays and the overhead that comes with maintaining large inventories, explains the journalist in the video. Moser himself explains that “wages difference use to be 30-40%, now it’s more 15-20%, and all the other associated costs might count for 1%, but when you have 20/30 items costing 1-2%, you can make up for a 15-20% price difference from China”.

The 7 minutes video, produced by PBS News Hour, gives other examples of companies that benefited from reshoring their production. Emerald Home Furnishings for example, is now capable to deliver a couch in 7 to 12 days from Albani, Mississippi furniture factory versus 6 weeks from China.

U.S. construction is on the rebound after the Great Recession

Nearly a decade after the recession hit every part of the economy, the construction Industry is on the rebound.  The contribution to the US economy has increased by more than 21% since it’s low point in 2011 and passed the $650 billion mark for the first time since 2008.

The construction Industry employed 6.7 million people last month, and the new concern – as we will see below - is not to find new projects but qualified workers to complete them. Read More.

Construction Boom - United States

Despite Slowdown, Houston Faces Construction Worker Shortage

A recent study from the Associated General Contractors of America, puts it blatantly: the construction sector needs more skilled workers. In the US, 69% of companies say they are having trouble finding craft workers, and this number goes up to 74% in the south and Texas in particular.

Worker shortage Construction Industry - NationalWorker shortage Construction Industry - South

The situation is similar in Houston, where despite a slowdown in construction projects, 11 of 14 companies are facing the same problem.

And the problem is not only that some positions stay vacant, it also draws concerns about the quality of the construction project. In some cases, such as the Brave stadium in Cobb County, it is estimated that one-third of the construction employees had never worked on a construction site before. And Industry experts do not seem to anticipate this problem to go away before long. In the next 12 months, 54% of the construction companies nationwide expect having hard time hiring, and 60% share their skepticism in the south side of the country.

Labor Market Construction Industry - SouthLabor Market Construction Industry - South

With such pessimistic forecast, the ACG (Associated General Contractors of America) demand to take actions, especially on the educational field. Earlier this week, AGC officials called for more vocational education, construction-focused schools and a reinvigorated “pipeline” taking young people from high school to careers in construction. Read More.

About Author

Simon previously supported Marketing Operations at ABIS, Inc. We are making businesses smarter by automating their processes to gain productivity, increase margins and generate more profits.

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