The same strategies that are helping U.S. manufacturers cut costs and root out quality issues earlier and earlier in the product lifecycle can help bring offshore jobs back to America.

The key, according to two experts who spoke at the 26th annual International Forum on Design for Manufacture and Assembly (DFMA) in Warwick, R.I., is recognizing the hidden costs of offshoring and embracing "upfront engineering" as a business model for innovation and profit creation.

"Traditional corporate and enterprise accounting systems do not generate total-cost-of-ownership (TCO) data for companies locating or sourcing overseas in search of the lowest labor cost," asserted Harry Moser, founder of the Reshoring Initiative and retired president of Agie Charmilles LLC.

When total cost of ownership is calculated, Moser said, most companies discover that they have saved closer to 10% -- rather than the 30% or 40% that they initially thought -- by offshoring.

"When TCO analysis is combined with DFMA product redesign and lean manufacturing programs, we're learning that the gap can close or disappear today -- and will definitely close in the next few years," Moser added.

The Reshoring Initiative offers free software and an online library of 98 articles to help companies construct a clearer view of the competitive landscape between the United States and so-called low-cost countries.
 
Shifting the Playing Field

Updating a study that he co-authored in 2004, product consultant Dave Meeker asserted that the problem of not accounting for total cost of ownership continues today.

"Labor is the common metric businesses pick in deciding to take production overseas. Yet, the largest slice of the cost pie is not really the labor content but the material and manufacturing process choices engineers make," Meeker said.

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