Ohio, Valley can lead reshoring efforts in US
While countries such as China and Taiwan worked for years to grow their technological prowess, Americans, sadly, have worked to send our manufacturing to other shores.
Now, due in large part to the effects of a global pandemic, we are paying the price for those decisions.
This holiday season, for example, Americans will struggle to find many foreign-made gifts due to supply-chain challenges triggered by clogged-up shipping ports.
Beyond that, car buyers know auto manufacturers for several months have faced shortages of semiconductor computer chips, manufactured mostly in Asia and necessary for new car computers. The chip shortage began in the spring of 2020 when global automakers were forced to shutter factories to stop the spread of COVID-19. The factories came back online sooner than expected with safety precautions, but by then, many chip makers had shifted production to high-demand consumer electronics. A fire at an automotive chip plant in Japan exacerbated the problem.
The chip shortage has led to the temporary closure of many auto plants, triggering significant drops in U.S. auto sales because automakers couldn’t produce enough vehicles to keep up with consumer demand.
Industry executives and analysts predict the chip shortage will last well into next year, and that automakers may not get back to normal production until 2023.
But all the news is not bad.
One of few good points to arise from the global pandemic is that it has spurred a national push to strengthen the domestic supply chain, especially for essential products. Studies show job announcements for reshoring — the process of returning production and manufacturing of goods back to the company’s original country — are growing. In fact, the number of companies reporting new reshoring and foreign direct investment in the U.S. are at more than 1,800 this year. According to a report released in September by Reshoring Initiative, a U.S.-based initiative that promotes reshoring and provides tools and support for companies evaluating locations, Ohio ranks No. 1 so far this year in reshoring announcements, with 37 companies totaling 12,423 jobs.
The report further indicates that most of the jobs coming back to America’s shores are in the fields of transportation equipment, primarily in electric vehicle battery production.
This hits close to home as the Mahoning Valley works toward the start of production at the new Ultium Cells auto battery plant in Lordstown, part of the continued branding of the area as the “Voltage Valley.”
It’s all very exciting for our region’s future.
Likewise, we are excited about the recently announced partnership between Lordstown Motors Corp. and Taiwanese tech giant Foxconn.
Under that deal, LMC is selling the sprawling Lordstown auto plant for $230 million to Foxconn. LMC and Foxconn also agree to pursue a contract manufacturing agreement for Lordstown Motors’ flagship vehicle, the Endurance truck.
The decision gives new credibility to manufacture of the electric pickup truck, following struggles the fledgling company experienced the past year.
We also are thrilled that the partnership will realize the tremendous potential of the Lordstown plant. Here, California-based Fisker’s PEAR (Personal Electric Automotive Revolution) electric vehicle is expected to be made under a Fisker / Foxconn agreement.
“As one of the largest contract manufacturers globally, Foxconn will bring to bear the purchasing power, supply-chain network and logistics capabilities to significantly reduce vehicle production costs and mitigate supply-chain risk,” stated a media release announcing the partnership earlier this month.
The potential is huge not only for our Valley, but for continued efforts to bring manufacturing back to America’s shores.
And as for the computer chip shortage, rather than sitting around fretting and waiting, Ford Motor Co. is developing a plan to fix the problem and prevent it in the future. That auto giant is engaging in talks with a U.S.-based computer chip maker to create joint development of automotive-grade chips.
America is among the most technologically advanced countries in the world. Surely, we have the capability, resources and workforce to manufacture these types of products right here at home.
The lure of cost savings in overseas markets where cost of living is significantly lower cannot be the only driving force when it comes to manufacturing and production.
Indeed, reshoring here to America, to Ohio and even to our Valley can play a big part of the U.S. manufacturing and economic recovery in 2021 and beyond.