Bosca, a high-end leather manufacturer, is experimenting with a plan to shift a small amount of production back to Springfield, a trend local and state experts said is slowly becoming more common in Ohio’s roughly $87 billion manufacturing industry.
A family-owned company with about 25 employees locally, the firm has had its headquarters in Springfield since it was founded in 1911. But most of its manufacturing is done in countries like China, Canada and Italy, said Christopher Bosca, the company’s president.
The plan would only create a couple jobs at first, as few as one or two beginning in August. But if successful, additional products could slowly be added in Springfield over time.
Employees would be trained in Springfield and initially manufacture business accessories like high-end desk pads and letter trays. The company’s strategy to manufacture some products overseas likely won’t disappear entirely, even if the Springfield experiment exceeds expectations, Bosca said. But he said his company has been waiting for the right opportunity to bring some work back to Ohio for years.
“Ever since we moved everything over there (China), which was a slow process, I’ve been probing to see when is the time to start bringing some of it back,” Bosca said. “It’s not that I don’t like it there. I think it’s just a long way away and it’s difficult to manage.”
Experts said other companies have cited similar reasons for moving production back to Ohio. U.S. manufacturing has become increasingly competitive in recent years, said Ryan Augsburger, managing director of public policy for the Ohio Manufacturer’s Association. He pointed to a 2013 study by the Boston Consulting Group that estimated as many as 2.5 to 5 million factory and service jobs could be added in the U.S. by 2020 due to higher U.S. exports, combined with production work that could be shifted from China.
That report also estimated average manufacturing costs in countries like Germany, Japan, France and Italy will be 8 to 18 percent higher than in the U.S. as early as next year.
“Ohio manufacturers are some of the most productive in the world,” Augsburger said. “That’s because Ohio manufacturers are really good at innovating the products that they make but also driving costs out and increasing competitiveness through the manufacturing process.”
Augsburger also pointed to some recent high-profile examples of shifting production, also known as “reshoring,” in the state, including Whirlpool Corporation’s announcement in March to invest $40 million into a facility in Greenville and create as many as 400 new jobs by 2018.
“There’s a benefit to keeping your manufacturing activities close to your suppliers,” Augsburger said. “It can improve stability and efficiency.”
The industry plays a significant role in the state’s economy. Information from the National Association of Manufacturers shows manufacturing accounts for 94 percent of the state’s exports, and the industry accounts for more than 12 percent of the state’s workforce.
Across the U.S., manufacturing supports about 17.4 million jobs, or about one in six private sector jobs.
Bosca produces high-end products like handbags, wallets and shave kits, among other products. Throughout its history, the company has worked with production firms across the U.S., as well as Costa Rica and Argentina. That strategy will remain in place for a variety of reasons, including long-term relationships with outside firms that have the skills needed to produce specific products.
“There, too, it’s getting more expensive, as we knew that it would,” Bosca said of producing the products overseas. “We never thought that would be the final answer, but it’ll be nice if we can bring some of it back here because it’s easier to control.”
In Springfield, economic development officials haven’t seen a huge push from manufacturers shifting production back to the area from overseas, but there has been an increase in area firms who are taking a closer look at the issue, said Josh Rauch, deputy economic development administrator for the city. Wages are an important factor that companies must consider, but complicated supply chains and transportation costs are often just as important, Rauch said.
“With things on the ground as they are now, it’s certainly becoming a viable option for some companies locally and also for larger multi-national corporations that use companies here to supply a product,” Rauch said.
Across the U.S., labor costs and quality are the largest drivers of the reshoring trend, said Horton Hobbs, vice president of economic development at the Greater Springfield Chamber of Commerce. Other companies are also choosing to invest in the region and choosing to expand their current production internally.
“Companies are looking more today than ever before, if they are outsourcing, at bringing some of that work back to the U.S.,” Hobbs said.
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By the numbers:
25 — Number of Bosca’s employees
12.6 percent — Approximate percent of Ohio employees in manufacturing
$87.2 billion — Total output from manufacturing in Ohio in 2012
$47.7 billion —Ohio’s manufactured goods exports in 2013
Sources: Bosca, National Association of Manufacturers