TIP Strategies is a privately held Austin-based economic development consulting firm committed to providing quality solutions for public and private‑sector clients.
This blog is dedicated to exploring new data and trends in economic development.
Interview with Rahul Tandon
Via: APM Marketplace
Treasury Secretary Tim Geithner and Fed Chairman Ben Bernanke are visiting India together today. The two are there to boost economic ties — last year trade between the two countries stood at $57.6 billion. They hope that figure will dramatically increase after India pushes through reforms to open up key sectors — like retail — to foreign investment.
If you want to see America’s growing influence on India just visit any large shopping center. You’ll see how popular American companies like McDonalds and Starbucks are with young people. Young Indians have embraced American culture over that of their old colonial rulers, Britain.
So on this trip, Bernanke and Geithner want to capitalize on this popularity for American businesses. They’ve met with the Indian finance minister and business leaders in Mumbai and issued positive statements about India relaxing it’s restrictions on foreign companies.
They want to make sure that as Indian markets opens up, American companies will be the first to benefit from tapping into a potentially massive marketplace. The increasingly wealthy Indian middle class is between 300-400 million people.
The IMF forecasts a growth rate slowdown for India compared to last year, so Indian businesses will, on the whole, welcome foreign investment. Though, it’s not a one-way visit, in return for allowing U.S. investment, India will want to boost growth in it’s flourishing information technology sector by forging more links with the Silicon Valley in the U.S.
By: Emily McMackin
Just like people, cities have their own distinct personalities. They come with their own set of strengths, weaknesses, quirks and attraction. Some are good at logistics and structure; others are creative and free-thinking. Bottom line: It takes all kinds to make the economy go round.
Rather than publish a dry inventory of the top 50 metros by export volume, Global Trade magazine has put together a “Who’s Who” list of sorts based on these top cities and the traits that set them apart in the global market.
Cities for Entrepreneurs, Techies
The award for Most Entrepreneurial went to Charlotte, NC, which ranks No. 43 in its export volume. Not only has Charlotte attracted nearly 7,000 new firms over the past decade (translating into 57,000 new jobs), it’s also known for its incentives, including electric and gas utility discounts, fast-track permitting and available grants.
But lately it is becoming even better known for creating an inviting environment for entrepreneurs. Start-ups and early-stage companies can find plenty of support through entrepreneurship programs, small business centers and incubators as well as assistance opening business in foreign markets.
Ranking No. 31 in its export volume, Austin, TX landed the coveted Most Likely to Succeed Award for its business-friendliness, record job growth and up-and-coming reputation as a tech hotbed.
A major ace in its corner? Lone Star State’s low-tax structure, which has zero corporate or individual income tax, tax breaks for businesses hiring and providing health care, and many more incentives. Austin’s tech boom is rivaling that of Silicon Valley, with Apple recently expanding its campus and eBay also growing there, together creating nearly 5,000 high-paying new jobs. Thanks to Austin’s eclectic arts and cultural scene and its “Live Music Capital of the World” designation, the city has no trouble attracting young intellects to fill those jobs.
Coming in at No. 32 for its export strength, Greenville, SC snagged the trophy for Best-Kept Secret, partly because of its proximity to universities like Clemson and the University of South Carolina, but also because of its sophisticated transportation system. Companies shipping products and goods have access to three interstates and freight lines and five ports, including the Port of Charleston.
Innovation is part of the landscape in Greenville, which is home to GE Energy as well as other cool companies and high-tech manufacturers.
Other winners were …
Best Logistics Infrastructure: Memphis, TN
Most Improved: Detroit, MI
Best Quality of Life: San Diego, CA
Best Proximity to Universities: Los Angeles, CA
Best Cost Structure: Cincinnati, OH
Best Incentives: Milwaukee, WI
King of the Hill (aka, Best All Around): Indianapolis, IN
Source: Thomas Klier, Federal Reserve Bank of Chicago
Via: The New York Times
Executives in the electronics industry often say that popular devices can’t be made in the United States largely because it would be too costly and inefficient. But in another industry, foreign auto companies have grown over the last 30 years to account for over 40 percent of vehicles built here. Related Article>>
Click image above for an interactive version.
1980 Volkswagen opened the first foreign-owned auto assembly plant since World War II in Westmoreland County, Pa., in 1978.
1990 Nissan opened its first plant in the U.S. in Smyrna, Tenn., in 1983. By 1990, there were seven foreign-owned assembly plants in the U.S., and foreign-owned supply plants had grown threefold to at least 335.
2000 Over the next decade another 100 suppliers were added, and three more assembly plants were in operation.
2009 In 2009 there were about 470 foreign-owned auto supply plants. Today there are 18 foreign-owned assembly plants, compared with 23 domestically owned plants.
submitted by: Derek Singleton, the Software Advice blog
Recent news coverage has highlighted several companies that decided to locate their production facilities within the United States. For instance, the Wall Street Journal reported that European aerospace manufacturer Airbus plans to open a massive plant in Alabama. The Detroit Free Press reported also reported that the high-end watchmaker Shinola would be setting up shop in Detroit.
These are encouraging signs for proponents of American manufacturing. What’s more, there have been reports of a number of companies “reshoring” their production from China or another overseas location. Companies are coming back for a variety of reasons, many of which are driven by conditions in China. Some of the most popularly cited reasons include:
—Chinese labor costs are expected to rise at a rate of 13 percent per year through 2015;
—The cost of shipping products around the world is dramatically increasing;
—Distance is making it difficult to design and collaborate on products; and,
—It is increasingly difficult (and expensive) to protect intellectual property in China.
Three Companies that Brought Production Back
While there are numerous reports of companies reshoring, these three represent a sampling of motives for a move back to U.S. soil:
Hurst is best known as the manufacturer of the Jaws of Life, and they recently made news for bringing their production back from China due to quality issues and unreliable suppliers. After Hurst started receiving returns of defective products, they started sourcing their production domestically. As a result, they have realized significant quality improvements and have more control over their supply chain.
In February of this year, General Electric decided to reshore the production of their water heaters from China to Kentucky. In addition to supply chain issues, GE had difficulty coordinating short delivery times. Even though GE had 30 percent lower labor costs in China, once supply chain and delivery issues were factored in, they saw their costs were actually six percent higher than producing in the US. The move back to U.S. soil has resulted in stronger control over their supply chain.
Peerless-AV moved back to the U.S. after an extended an expensive (seven figures in legal fees) battle surrounding intellectual property theft and knock-off products. Moving back afforded Peerless better intellectual property protection and provided them the ability to bring products to market more rapidly.
Let’s Turn the Trickle Into a Trend
Reshoring is not the dominant trend in the industry. The number of companies that have left the U.S. still dwarfs the number of companies that have come back to the U.S. The question then becomes: how do we turn this trickle into a trend? Here are a few ways we can make it happen:
—Create a more educated workforce that can fill skilled labor gaps and get Americans interested in manufacturing careers at all levels (e.g., assembly, engineering, management, etc.).
—Use automated assembly processes to limit the labor input of production more extensively.
—Help companies evaluate their true total cost of ownership (TCO) to help model the risks and costs of offshoring production.
If you have any thoughts on the reshoring trend, I want to hear from. You can contact me via the Software Advice blog at: What Can be ‘Made in the USA’? Or you can reach me directly by emailing email@example.com.
By: James R. Hagerty
Via: The Wall Street Journal
About 14% of U.S. companies surveyed by a Massachusetts Institute of Technology professor definitely plan to move some of their manufacturing back home—the latest sign of growing interest among executives in a strategy known as “reshoring.”
David Simchi-Levi, an engineering professor at MIT who runs a program for supply-chain executives, said he surveyed 108 U.S.-based manufacturing companies with multinational operations over the past two months. The companies range in size from annual sales of about $20 million to more than $25 billion, and most of them are over $1 billion, Dr. Simchi-Levi said.
Among the main reasons cited for reshoring: a desire to get products to market faster and respond rapidly to customer orders; savings from reduced transportation and warehousing; improved quality and protection of intellectual property.
About 21% listed “pressure to increase U.S. jobs,” a hot political issue this year, as a factor in reshoring. Dr. Simchi-Levi said the survey didn’t specify where that pressure was coming from. But some companies appear to feel both political and market heat to show they make things in the U.S.
In February, Boston Consulting Group surveyed 106 companies with annual sales of $1 billion or more and found that 37% planned to reshore or were “actively considering” it. The MIT survey is more precise in singling out those with definite plans. When asked the broader question of whether they were considering a move to reshore, the MIT study found that 33% of those surveyed said yes.
Google Inc. GOOG +2.83% made a big splash last month by announcing that its new Nexus Q music and video player will be manufactured in the U.S., something that rarely occurs in consumer electronics. Scores of other companies—including Caterpillar Inc., CAT -1.03% General Electric Co. GE +0.51% and Ford Motor Co. F -0.96% —in the past two years have announced plans to make in the U.S. some products they previously brought in from overseas.
GE’s website includes an “American Jobs Map” providing details of 14,500 new jobs announced by the company since 2009.
Some foreign companies also have been stepping up their U.S. manufacturing. The U.S. unit of Japan’s Yaskawa Electric Corp. 6506.TO -2.11% recently decided to make a new line of electrical motor controls for heating and ventilation equipment at its plant in Buffalo Grove, Ill., rather than in China. Craig Espevik, a vice president at Yaskawa, said the cost of the parts will be about 10% higher, even after shipping costs are included, mainly because of higher wages in the U.S. But producing the parts here will allow for quicker deliveries to customers, lower inventories and more customization.
In April, U.S. Sen. Debbie Stabenow, a Democrat from Michigan, announced legislation dubbed the Bring Jobs Home Act. The bill would provide tax breaks to help companies cover the cost of moving production back to the U.S. and ban tax deductions for the expenses of moving operations abroad.
MIT’s Dr. Simchi-Levi said lower U.S. corporate taxes would help bring more manufacturing back. He said it wasn’t yet clear whether the reshoring trend will result in a large amount of U.S. job growth. Some of the jobs will be low-paid assembly work, he noted.
Even so, he called reshoring an encouraging development: “Once you start this process, there is no telling where it ends.”
The complete results of the MIT survey are due to be presented at a Forum for Supply Chain Innovation conference July 25 at the university in Cambridge, Mass.
By: Will Oremus
Former Alaska Senator Ted Stevens called the Internet “a series of tubes.” Sociologically, it’s something more than that, but on a physical level, he’s basically right. Easy as it is to forget, the information that appears on our screen generally travels first through a vast network of fiber-optic cables.
But where exactly does it go on its journey? A new set of images published in this week’s issue of Fortune provides some of the clearest and prettiest pictures yet. They’re based on maps from GeoTel Communications, a company that specializes in “telecommunications geography.” GeoTel’s CEO, Dave Drazen, tells me the information is derived from major U.S. based carriers and publically available sources. He notes that the maps aren’t comprehensive—they don’t include military or government installations, for instance. Still: wow.
The maps—one of the world as viewed from the North Pole, and one of New York City—go along with an article by Andrew Blum in Fortune’s print edition this week. They were visually enhanced by Fortune graphic designer Nicolas Rapp, who also posted them on his blog. They’re reprinted here with GeoTel’s permission.
New York City’s fiber-optic cable routes are concentrated around the financial district. One major hub is the telecommunications building at 60 Hudson Street, in TriBeCa:
The world’s fiber-optic network as viewed from the North Pole: