As published in Toledo Business Journal - June 1, 2013
The package mailed to manufacturers as part of the
Sandusky County Economic Development Corporation (SCEDC) marketing initiative
working to reshore jobs
Project Olé targets return
of jobs from Mexico
A number of CEOs and senior executives at Midwest manufacturing companies that have operations in Mexico recently received a package at their headquarters office. The package contained a box with a bulletproof vest next to a life jacket on its outside cover. A message inside the package stated: “Pick One!” It also leads the targeted corporate executives to a microsite designed especially for their company.
The package included a short note asking the CEO or senior executive to consider relocating the company’s manufacturing facility that is currently located in Mexico to Sandusky County in northwest Ohio.
This package would not be the first time that these Midwest CEOs have had to think about the security and safety of their facilities and employees in Mexico. It would not be the first time their attention was given to the increasing violence of the Mexican drug cartels and the demands of trying to operate a business in this type of challenging environment.
Reshoring jobs back to Ohio
The recent shipment of these packages was part of a creative marketing initiative by the Sandusky County Economic Development Corporation (SCEDC). The economic development organization is working to address a major problem facing these companies and at the same time win new jobs for the Sandusky County area.
SCEDC has organized a project team that is being led by the economic development professionals from communities in the county that include Bellevue, Clyde, and Fremont. The team has named the work effort Project Olé. The team members include team leader Kay E. Reiter, SCEDC; Steve Fuhr, Bellevue Development Corporation; Michael Jay, City of Fremont; Daniel Sabolsky, ClydeScope; and Wayne Earley, Ohio Polymer, Inc. Funding for the project came from each of the communities involved, the Sandusky County Commissioners, multiple foundation grants, as well as SCEDC’s investors.
Three Scale Strategy LLC from the Columbus area assisted the Project Olé team by identifying 44 plastic-related manufacturers with corporate headquarters located in states contiguous to Ohio with current manufacturing facilities located in Mexico. The Project Olé team is currently utilizing a six-point marketing strategy under professional direction. A large portion of the project’s strategy is the outlining and quantifying of the competitive benefits of reshoring amidst an ever-changing landscape in Mexico, and the advantages of doing business in Sandusky County.
“An important opportunity exists to aid manufacturers struggling to operate their facilities in Mexico. There are jobs that used to be here in our country that should return,” stated Reiter, SCEDC’s executive director.
Hart, a Maumee Ohio-based marketing communications agency, is collaborating with SCEDC and providing a full range of advertising, marketing, and public relations services to create awareness, consideration, and a redefinition of the way CEOs view manufacturing economics and ultimately relocation of their manufacturing operations.
SCEDC is working to draw manufacturing operations from Mexico back to the US, specifically to the “North Shore” (Sandusky County). While Mexico was once a lower-cost alternative for manufacturers, in recent years things have become more complicated. Escalating violence fueled by the drug cartels has caused some CEOs to reconsider. Crime, violence, and kidnappings have become a constant worry causing the costs of security to rapidly escalate. Additionally, a Mexican labor force that lacks skills is costing manufacturers in the form of warranty claims and damaged reputation. Fuel costs (shipping product back to the US) and losses from theft have also added costs to Mexican-based manufacturing.
Through this campaign, Sandusky County is alerting these companies that it has inexpensive land ready for development: an eager and skilled workforce: knowledge of the plastics and polymers industry; and proximity to transportation via the Great Lakes, the Ohio Turnpike, rail, and air via Toledo, Detroit, Cleveland and Columbus. The county’s central location also puts it near the bulk of the US and Canadian populations and manufacturing bases.
To begin connecting with selected CEOs and other executives, SCEDC worked with Hart to send a dimensional mailer, a direct mail campaign, and customized micro-sites. The dimensional mailer was intended to entice CEOs and other executives to each visit a custom microsite that will inform them about reshoring. The messaging includes safety concerns, and describes a better lifestyle in Sandusky County. The idea being that the direct mail card will start the conversation with other companies that the County approaches.
“We work with many clients in a broad range of industries, but we have been impressed with the focus that Sandusky County has demonstrated on this project,” stated Mike Hart, president of Hart.
Investing in NW Ohio
Part of SCEDC’s focus on the opportunity to bring jobs back from Mexico to the region is the result of experience by one of Sandusky County’s own manufacturers. In 2007, Fremont-based Crown Battery Manufacturing Company purchased a battery manufacturer in Reynosa, Mexico. The Mexican operations were experiencing high levels of quality issues and product returns due, in part, to high employee turnover.
Crown Battery made the decision to close the Reynosa plant and move its production to Fremont, Ohio. In an interview for an article that appeared in Toledo Business Journal in 2009, company president Hal Hawk explained, “We found that our people in Fremont [could] actually produce a better battery than employees in Mexico that make $1.81 an hour.”
Adding to SCEDC’s motivation behind this project has been its success in attracting operations from outside the United States to locate production facilities in the county. Significant new investment and new job creation has come to Sandusky County as a result.
In 2005, Fisher & Paykel Laundry Manufacturing, Inc., a New Zealand company, located its first United States plant in Sandusky County. The company closed its Brisbane, Australia plant and leased a 100,000 square foot facility in Clyde, Ohio. The Sandusky County location was selected over site options in other states. Fisher & Paykel invested $31 million in new equipment for this facility. SCEDC’s success with this project resulted in 118 new jobs in the county with higher paying compensation levels.
In 2012, Mitsubishi Chemical Performance Polymers, Inc. (MCPP), a wholly owned subsidiary of Mitsubishi Chemical Corporation headquartered in Tokyo, Japan, made the decision to purchase a manufacturing facility in Bellevue, Ohio. The Company purchased a vinyl chloride compounding facility from A. Schulman, Inc.
Polyvinyl chloride (PVC) compounds are used in a wide range of products, including interior and exterior components for automobiles and insulation for electric wiring. MCPP forecasts continuing strong demand for these products in North America.
MCPP purchased the Bellevue plant as part of a strategic move to enhance competitiveness in the PVC compound field and meet increasing demand in the North American market. MCPP plans to capitalize on this strategic acquisition by entering into a variety of markets beyond automotive components, as well as by expanding its existing business in thermoplastic elastomers for automotive injection and extrusion applications.
There is a growing interest by domestic and foreign manufacturers to locate production operations in the US. Many companies that moved facilities offshore have learned through experience that their expectations were much different than their actual results. In addition, key criteria that drove their decisions have now changed and production overseas has placed these companies at a competitive disadvantage.
The Reshore Initiative and its founder, Harry Moser, are working to assist manufacturers in understanding the impact to their business that will occur when an overseas plant is returned back to the US.
The organization has set up a tool, the Total Cost of Ownership Estimator, which assists manufacturers in assessing the financial impact of production offshore. Many companies are learning that they can lower their total costs by producing in the US.
These companies have also learned that reshoring has significant benefits to product quality. Reduced warranty costs and increased customer satisfaction have been a result. In addition, important improvements in their own operations have occurred when substandard foreign parts and components are eliminated.
After reshoring, these manufacturers enjoy significant reductions in delivery cycles. Improved customer satisfaction, reduced inventory requirements, and significantly reduced obsolescence, among other benefits, have been the result.
A long-term commitment
SCEDC is making a long-term commitment to its reshoring initiative that is positioned to bring additional investment and new jobs to the region.
“The decision by a company and its CEO to reshore operations back to the US is involved and will not be made quickly. This initiative will take more work on our part. It will take more time to generate leads from these targets and decisions from the companies that want to improve their operations. We will remain committed to reshoring these jobs back to our communities,” concluded SCEDC’s Reiter.
One of the benefits that SCEDC is stressing during its reshoring initiative is the skill and experience of its workforce. A project to increase the interest of high school students in career opportunities in manufacturing is being implemented. Guidance counselors from 8 school systems in the county are scheduled to take a bus tour of major manufacturing operations in Sandusky County.
The event is set for October 25, 2013 during National Manufacturing month. The guidance counselors will gain insight into career opportunities and be able to better direct their students in this area. The project is being co-chaired by SCEDC’s Kay E. Reiter and Cindy Mudge, director of human resources at Whirlpool Clyde.