Moving manufacturing to the U.S. involves a lot of moving parts.
“Buildings, equipment, talent, technology. So it’s not for the faint of heart,” said Lisa Anderson, president of LMA Consulting Group.
She said it’s easier for large corporations to move production because it requires a lot of capital. It’s also easier if they already manufacture in the U.S.
“They can take advantage of the infrastructure that they’ve already built,” said Anderson.
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What Kinds of Companies Can Easily Move Manufacturing to the US?
Kraft Heinz just announced plans to invest $3 billion in its U.S. plants. But companies that make clothes and toys, which have low margins and are difficult to produce with robots, will have a harder time relocating.
One of the things President Trump says he wants to accomplish with this trade war is the reshoring of manufacturing — bringing production lines and jobs to the U.S. Well, Reuters is reporting that Kraft Heinz, maker of ketchup and Kool-Aid and Philadelphia cream cheese, is planning to invest $3 billion to upgrade its U.S. factories to help lower costs, partly due to tariffs.
Moving manufacturing to the U.S. involves a lot of moving parts.
“Buildings, equipment, talent, technology. So it’s not for the faint of heart,” said Lisa Anderson, president of LMA Consulting Group.
She said it’s easier for large corporations to move production because it requires a lot of capital. It’s also easier if they already manufacture in the U.S.
“They can take advantage of the infrastructure that they’ve already built,” said Anderson.
Kraft Heinz has 30 plants here, and grows its tomatoes in California and its potatoes in Idaho. In fact, Anderson said most food manufacturing is regional, because it’s heavily regulated by the FDA and transporting food is complex.
There are other kinds of companies that may reshore. Panos Kouvelis, a professor of supply chain operations at Washington University in St. Louis, said that mostly includes goods with growing demand.
“So I expect to see a lot more investments in electric vehicle manufacturing in the U.S.,” said Kouvelis — as opposed to gas-powered cars.
Another safe bet is semi conductors, used in everything from cell phones to sensors, also because reshoring them would benefit national security.
Products that are unlikely to migrate include toys — basically anything with low margins that requires expensive labor that cannot be done by robots.
“I do think whatever manufacturing is going to come back is going to be rethought or produced with a lot more automation,” said Kouvelis.
The top concern when it comes to companies thinking about manufacturing in the U.S. is labor, according to a recent survey by the Reshoring Initiative. Harry Moser is president of the nonprofit.
“If we don’t attract those workers, if we don’t train them well, then you can’t bring the work back because there’s nobody to do it,” said Moser.
Kraft Heinz says its $3 billion investment will create 3,500 construction jobs. It will not create new jobs at manufacturing plants.
Originally published on Marketplace