Material Handling & Logistics is part of the Business Intelligence Division of Informa PLC

After suffering through a steep decline from 199812 to 2010, manufacturing employment has stabilized at 9.9 percent of jobs in the Chicago region, the third largest sector behind health care and retail.13 Despite its decline, manufacturing is a driver of the region’s economy and has opportunities for good-paying jobs. However, with a rapidly aging workforce, an influx of trained labor is needed to maintain its prominence and potentially grow. Stark underemployment among young African Americans and Latinos could receive some amelioration from the regional manufacturing sector’s need to replace these retiring employees, and to meet the needs of industry growth and expansion. In order to make these jobs inclusive of these black and Latino young people, the industry will need to make some significant shifts in terms of outreach and training, among other factors.

The manufacturing sector pays better than the majority of the other sector groupings in the Chicago region. Figure 5 shows the average monthly earnings by industry in the region in the first quarter of 2017. Manufacturing had the eighth highest monthly earnings of twenty industry groupings, at $6,914. Earnings were more than twice as high as they were in four other industry groupings, including retail trade; agriculture, forestry, fishing and hunting; arts, entertainment, and recreation; and accommodation and food services.

I think both are right! And wrong! As pointed out in this blog, “ATK tries to measure reshoring indirectly by measuring imports. […] BCG uses surveys of reshoring plans, but companies’ actions often differ from plans.” We should instead measure the hard facts. The opportunity comes from McKinsey’s Digital globalization: The new era of global flows report. They found that global consumption growth is outpacing trade growth for a number of finished manufactured goods, such as cars, pharmaceuticals and plastic goods. Where are those goods being made? Well, the answer is very likely to be found in local-for-local manufacturing.

Manenti-reshoring-1

On-site nitrogen generation can be a cost-effective option for a wide range of purity and flow requirements tell me more

Figure 2 shows average yearly earnings for the top ten occupation groups by number of job postings in the Chicago region for jobs requiring a high school diploma or vocational training as the highest level of educational attainment from April 1, 2017 to March 31, 2018. Among these occupation groups, manufacturing and production occupations pay slightly above the group median. Job postings for manufacturing and production occupations advertised pay an average of $35,505, putting the grouping lower than just four others: maintenance, repair, and installation ($50,964), sales ($48,023), finance ($40,442), and health care, including nursing ($39,874). It should be noted that a significant share of maintenance and repair jobs are within factories, and even without factoring in that overlap, manufacturing and production occupations represent a significant target for immediate efforts to diversify manufacturing given their attainable entry-level requirements.

Bringing the labor-intensive apparel and footwear industry back to the U.S. is also at the top of Walmart’s agenda. Last January, the company’s U.S. Manufacturing Innovation Fund awarded $2.8 million to five universities for their ability to address two key barriers to increased domestic manufacturing: first, to reduce the cost of textile production, and second, to improve common manufacturing processes with broad application to many types of consumer products.

Some of its principal achievements and milestones, as of fall 2017, include supporting 497 worker experiences (paid internships and summer jobs), with students earning a total of $291,000; 421 nationally recognized industry credentials earned by 215 Manufacturing Connect participants; ninety-nine full-time manufacturing jobs with an average retention of one year and wages ranging from $20,000 to $75,000, with benefits; and enlisting the participation of ninety-six manufacturing companies. Other accomplishments include the formation of the Young Manufacturers Association with over seventy members, including ACCA alumni.20

The original confusion here is on the meaning of the term reshoring. We shouldn’t consider reshoring simply as bringing back manufacturing to a home country. That doesn’t make any business sense per se, unless the home country has a thriving economy. I believe local-for-local manufacturing is a more appropriate term to describe today’s manufacturing footprint strategies. This might call for reshoring to home countries or nearshoring opportunities. It might well still call for low-cost country sourcing. The reality is that companies will only add production capacity to a certain location if the economics makes sense.

Our combination of sensor hardware, CAD/CAM software and data management systems put intelligent manufacturing at your finger tips.

Perhaps the best example of local-for-local manufacturing is from Danish toy maker Lego. Unlike most other firms in its industry, Lego did not race off to build low-cost production capacity in China. Bali Padda, Lego’s executive vice president and chief operating officer, describes Lego’s local-for-local manufacturing footprint as comprising regional production sites, serving the U.S. market from Monterrey, Mexico, and European markets from facilities in Denmark, the Czech Republic and Hungary. The company is now setting up in China to serve the Chinese domestic market.

More information about text formats

Are you ready to rethink quality? This free eBook is your essential guide to using quality to take your business to the next level.

Manenti-reshoring-3

I think both are right! And wrong! As pointed out in this blog, “ATK tries to measure reshoring indirectly by measuring imports. […] BCG uses surveys of reshoring plans, but companies’ actions often differ from plans.” We should instead measure the hard facts. The opportunity comes from McKinsey’s Digital globalization: The new era of global flows report. They found that global consumption growth is outpacing trade growth for a number of finished manufactured goods, such as cars, pharmaceuticals and plastic goods. Where are those goods being made? Well, the answer is very likely to be found in local-for-local manufacturing.

Manenti-reshoring-4

Creating a high-wage manufacturing economy in Chicago requires that all industrial policy is carried out with the needs of workers and communities at the forefront. In what follows, we will present our recommendations and best practices towards a more diverse and robust manufacturing sector in Chicago. Each section will include one or more model project or initiative worthy of close attention, and then a list of action items or important aspects of the section’s subject that must be considered if they’re to be successfully addressed.

Perhaps the best example of local-for-local manufacturing is from Danish toy maker Lego. Unlike most other firms in its industry, Lego did not race off to build low-cost production capacity in China. Bali Padda, Lego’s executive vice president and chief operating officer, describes Lego’s local-for-local manufacturing footprint as comprising regional production sites, serving the U.S. market from Monterrey, Mexico, and European markets from facilities in Denmark, the Czech Republic and Hungary. The company is now setting up in China to serve the Chinese domestic market.

Manenti-reshoring-2

Accessories

As a matter of fact, manufacturing footprint design increasingly requires considering dozens of separate variables, each with unique variances and all interacting in ways that change with time. Time is especially critical to the analysis because factories exist in space and society in ways that affect people’s lives as well as return on invested capital.

This site uses cookies to store information on your computer. Some are essential to make our site work; others help us to better understand our users. By using the site, you consent to the placement of these cookies. Read our Legal Notice to learn more.

Figure 9 shows manufacturing employment as a share of total employment by race/ethnicity in the Chicago region from 1994 to 2017. Each group experienced decline at faster rates from 1994 to 2010 and slower or stable rates from 2010 to 2017. For the total population, the percent employed in the manufacturing industry decreased from 17.9 percent in 1994 to 10.7 percent in 2010 and decreased 0.8 percentage points more from 2010 to 2017. 34.6 percent of Hispanic or Latino employment in 1994 was in the manufacturing industry, compared to just 15.7 percent of whites (non-Hispanic or Latino) and 6.5 percent of Black (non-Hispanic or Latino) employment. From 1994 to 2010, blacks and Latinos experienced relatively larger declines in manufacturing work as the proportion of black (non-Hispanic or Latino) workers in manufacturing decreased by 54.2 percent, for Hispanics by 49.1 percent, and Whites by 36.3 percent.

Tool Finder

The original confusion here is on the meaning of the term reshoring. We shouldn’t consider reshoring simply as bringing back manufacturing to a home country. That doesn’t make any business sense per se, unless the home country has a thriving economy. I believe local-for-local manufacturing is a more appropriate term to describe today’s manufacturing footprint strategies. This might call for reshoring to home countries or nearshoring opportunities. It might well still call for low-cost country sourcing. The reality is that companies will only add production capacity to a certain location if the economics makes sense.

Matthew Wilson, MUPP, is an Economic Development Planner at the Great Cities Institute at University of Illinois at Chicago. He primarily works within its Neighborhoods Initiative, where he collaborates with community-based organizations, university faculty, and staff to provide technical assistance and services for community and economic development projects. He holds a BA in Urban and Public Affairs (2012) and a Master of Urban Planning and Policy (2014), both from University of Illinois at Chicago.

Pierfrancesco Manenti is VP of research at SCM World, a cross-industry learning community powered by influential supply chain practitioners.

Building on a recent paradigm shift in analysis of these issues, wherein social inclusion is treated as multi-dimensional, dynamic, and multi-layered,1 this report makes a conceptual distinction between diversity, which considers the identity makeup of a group, and inclusion, which is the project of enabling individuals to participate and contribute fully to the group.2 Making the manufacturing workforce more diverse through the strategies in this report is only one component of true inclusion.

Getting Better Local Manufacturing

Explore how companies like yours are achieving speed and confidence in their processes.

We want to ensure that the regional manufacturing community has access to opportunities to innovate within their organisations in order to support growth. We will do this by helping manufacturers identify and access potential collaborators and sources of support.

Get to know the creative and adventurous people we call our ambassadors.

see more in: The Recognized Leader

Manenti-reshoring-4

The Forum’s Steering Group consists of manufacturers from small to large companies in the region, as well as representatives from Barnsley & Rotherham Chamber, Cutlers’ Company and Made in Sheffield Chairman. It’s headed by the Master Cutler and currently chaired by Peter Hoy of Macalloy. The group meets regularly to plan Forum activities with consultation from members, seeks support from its Sponsors and also addresses matters relating to the Local Enterprise Partnership. You can find out who’s involved by visiting the Who We Are page.

“It is our strategy to have production close to our core markets in order to secure short lead-times and world-class service to our customers and consumers, and it has proven a successful strategy,” says Padda. “In addition, by placing a manufacturing site in the region we reduce our environmental impact as we will reduce the need for transporting products from Europe to be sold in Asia.” The way for Lego to maintain its core production close to markets —including its largest manufacturing plants in high-wage Denmark—is through leveraging cutting edge automation. If you can’t do low-cost labor arbitrage, then automate!