Dave Osterday

by Dave Osterday

Senior Project Manager, Business Development Lead

Moving Manufacturing Back to the United States

  • APRIL 27, 2020
  • READ

As Japan prepares to move manufacturing out of China, the country plans to use $2.2 billion of its record economic stimulus package to aid manufacturers in shifting production back into their country.

During this time of unknown, a variety of situations and outcomes are being considered.  As an industry expert Architect for industrial facility design, I am intrigued by the idea of even a small percentage of manufacturing moving back into the United States. To that end, I have begun envisioning how the US built environment could be best prepared for the variables of that outcome.

The density of the American city is increasing with the current re-urbanization trend.  The service-based sector of the US economy has already found a way to adjust with diversified and flexible delivery systems.  To stay relevant and functional post-pandemic, the industrial and manufacturing economic sector will need to adjust similarly by creating and utilizing flexible spaces that allow for worker distancing when needed and are in close proximity to multiple population and workforce bases. That could include moving manufacturing back into the United States in some capacity, and to do so, possibly preparing “second tier” cities, like Cincinnati and Columbus to become the new home to these manufacturing headquarters.


Construction Timelines and Design Elements

It all begins with planning and design. There are three tracks for moving, or opening, a manufacturing facility in the United States.  The most expedited path forward would be to work with an existing building—roughly a 6-9 month lead time. The second track would utilize existing land assets, which is a timeline of roughly 9-18 months. The third track, and most time consuming, is the search for and acquisition of land assets on which to build. This takes several months more than the other options, or even multiple years.   

Reducing this timeline and being ahead of the curve will be key for manufacturers. The speculation for “second tier” cities supports this concept.  They have the land, population and in some instances, even existing buildings to utilize which expedites the construction and move-in timelines to kick-start manufacturing. Cincinnati is a great example, with major companies like Amazon moving logistics facilities to Cincinnati, and with support from groups like REDI Cincinnati.

Components and Considerations

There are three key points of consideration during this process of moving, or beginning, a manufacturing facility—space, procurement of equipment and workforce. The goal is to align the timeline of all three to start simultaneously, which would provide the greatest cost benefits and opportunities for the owner.

By selecting track one as mentioned above, manufacturing companies minimize the variables of the space.  If chosen strategically, a city with a population to support manufacturing, would allow companies to devote their focus to equipment procurement. Should an owner select track three, there are now all three variables to consider, and there must be time and a strong team built working to align the implementation of all three at the same time.

Breaking down all three variables helps to better understand the goal to be accomplished in the alignment of a successful manufacturing facility.

Variables and Control

Understanding the three tracks can help manage expectations of timelines and advantages to each. Owners will have to figure out how to navigate taxes, costs and (re)tooling, but this short term obstacle has long-term investment benefits.

For example, when manufacturing equipment is purchased it is often fabricated remotely from the facility, and if the new facility is not prepared, owners may be charged a storage fee, an additional cost and a loss leader as the equipment lies dormant. Success comes from lining up the delivery date as close as possible to the prepared building space and trained workforce to align all three variables.

While each case is unique, qualifiers can be easily identified by industry experts to determine whether a manufacturing company is being set up for success.

Future Forecast

While not all of it—and not necessarily immediately—I do foresee manufacturing moving back to the United States. Looking to Japan, their government wants to keep people safe and support their employment, while also raising funds. Moving manufacturing back into the country does just that;  it keeps people employed and ultimately builds a tax base.

Major manufacturers having facilities in multiple locations creates flexibility and resiliency to continue manufacturing even if one area is shut down, should something like this pandemic ever occur again.

While there are undeniable advantages to the globalization of manufacturing, there are clear benefits to supporting the growth of the manufacturing industry within the United States, like the speed of recovery and reaction. Stable and resilient manufacturing within our country may come with some short term obstacles, but the investment will result in long term advantages.

 

Dave Osterday

by Dave Osterday

Senior Project Manager, Business Development Lead

Dave Osterday is a natural leader for M+A's Industrial sector, comfortable with building and growing legacy relationships. He enjoys overseeing projects that come together from start to finish, learning and mastering their processes and operations.