Like many of you, I was shocked when the COVID-19 situation revealed the extent of U.S. dependence on certain foreign countries, like China. I wanted to know two things: How bad is it, and are we going to do anything about it?
|Image: Freshidea/Adobe Stock|
Of course, my focus is the plastics industry, but first a general note. We need to have some common sense here. Ninety-seven percent of plastic artificial flowers come into the United States each year from China, but we cannot look at that through the same lens as the importation of 90% of our antibiotics.
What direction will we take for products and supplies that fall somewhere in between those two on the criticality scale? I talked with almost 100 small and medium-sized business leaders about this topic, and asked what their companies plan to do.
The consensus is that reshoring will take some time, but Tom Star, President of Molded Devices Inc., said: “Many of our industrial customers are contemplating changes to their supply chains, as well as several large medical device companies. For strategic reasons, those companies may not want their names out there right now.”
Ketan Deshpande, General Manager with custom molder Pioneer Plastics Inc., echoed that sentiment, saying his company is seeing a fair amount of work coming back from overseas.
Jon Hubers, Sales and Operations Manager at custom extruder Crescent Plastics, said his company is seeing a trend with customers reshoring product to reduce their overall costs and ensure product stability. “Reshoring can solve the problems of long lead times associated with shipping product overseas, issues with quality, political instability, communication, and most recently, countrywide industry shutdowns,” said Hubers.
Ervin Issagholian, President of Thermoformer EPI Packaging, was more direct. “Most of our manufacturing is already done in Los Angeles, but our goal is to reposition everything from China to a different country.”
Based on my conversations with these and dozens of other plastics leaders, there is some reshoring happening now, mostly what could be done without large capital investments or further disruption of supply chains. There is a large appetite for more, but given that our GDP is forecast to take as much as a 40% hit in Q2, it is unlikely that we will see a net jobs gain from reshoring until Q4.
About the author
Paul Sturgeon is CEO of KLA Industries, a national search firm specializing in plastics, packaging, and polymer technology. If you have a topic you would like to see discussed, a company that is growing, or other ideas for this blog, e-mail Sturgeon at pau[email protected].