Made in Minnesota Again           

Many OEMs are bringing work back to manufacturers in the United States.

Many large OEMs are bringing their supply chain work back to the United States, and many Minnesota companies are experiencing the benefits of the home-sourcing trend.

"Manufacturers tell me that the offshoring fad is quickly, even dramatically, losing its appeal for OEMs," says Enterprise Minnesota president & CEO Bob Kill. "Long gone are the extraordinarily inexpensive costs of overseas labor paired with favorable exchange rates that made hiring foreign suppliers such a no-brainer."

The reasons for "home-sourcing" vary, according to Kill. Some high-tech manufacturers worry about intellectual property, while others see higher fuel costs and transportation adding to the total cost of ownership.

Nelson Numeric is one company that sees work coming back to domestic manufacturers. Located in Bloomington, Nelson Numeric is a contract manufacturer for precision machining for customers in aerospace, electronics, and medical device markets. The "new normal" of shorter lead times and reduced inventory is playing a part in the new trend says company president Reed Nelson.

"We see more of coming back than we see going out," Nelson said. "Without pretty significant volume and lead times, it's really hard to do offshoring."

In addition, OEMs are factoring in shipping costs to the total cost of ownership. Many of Nelson Numeric's products are heavy and are costly to ship a long distance. As fuel prices stay high, domestic manufacturer will benefit says Kill.

"When the economy was good, OEMs weren't so concerned with inventory and total cost of ownership; they were negotiating more on price and tactics instead of high value and strong relationships," Kill said. "Now it's all about working with clients on the total cost of ownership. That includes thinking about raw materials, manufacturing costs, financing, inventory and shipping -- the whole picture of what it takes to make a product."

Super Radiator Coils in Chaska is another manufacturer seeing work coming back stateside. The company makes large heating coils and cooling coils. Because the coils are so large, the company's customers prefer to keep shipping costs minimal by using US suppliers.

The domestic business is helping Super Radiator Coils grow this year. After peaking at nearly 380 workers in 2008, total employment is back at 348 workers. The company plans to add several front office positions and floor workers are getting overtime shifts. A recent project with NASA for large 50-foot coils has even prompted plans for a facility expansion next spring. The new space will add 35,000 square feet and allow the company to take on larger projects and further grow business.

Companies report that the weak dollar is helping foreign OEMs reconsider US suppliers as well, adding to business coming back. The numbers show a growing trend. The Minnesota Department of Employment and Economic Development recently reported that exports from the state grew almost 12 percent to $5.3 billion in the second quarter of 2011 - a record quarterly high.

Home-sourcing is changing the relationship between OEMs and suppliers, which will benefit Minnesota companies according to Kill. "Every OEM wants a flexible and fast response from its suppliers, and they have rediscovered value in the high-quality, precision manufacturing that is a hallmark of American -- and Minnesotan - production," Kill said.

Leveraging ISO Certification to Grow Your Business

January 18, 2012
8:00am-11:00am
Maple Grove Community Center (12951 Weaver Lake Rd, Maple Grove)
$110 Regular

What to Expect?
What is your strategy to become an industry leader? Organizations that adopt internationally recognized standards for quality inside their business systems are far out in front of their competition. According to a Harvard Business Review Research report, sales are nearly nine percent higher with ISO Certification and those companies are more likely to stay in business by a factor of 93 percent over the next four years.

Learn from business leaders who are making ISO Certification part of their overall business strategy. These certifications can open up new markets and ensure internationally desirable characteristics of products and services such as quality, environmental friendliness, safety, reliability, efficiency and interchangeability - all at an economical cost.

Speakers:

Matt James, President,  M&M Precision Machining

Mark Held, General Manager, Ickler Bearing & Machine Co.

Kristina Olson, COO, Rare Earth Coatings


Presenter and Moderator:

David Ahlquist, Business Growth Consultant, Enterprise Minnesota

Sponsored by: