MH&L Editorial Advisory Board Roundtable--Part 1: Competing in a Global Marketplace
MH&L Editorial Advisory Board Roundtable--Part 1: Competing in a Global Marketplace,
MH&L Editorial Advisory Board Roundtable--Part 2: The Infrastructure Capacity Crunch,
MH&L Editorial Advisory Board Roundtable--Part 3: Technology Challenges,
MH&L Editorial Advisory Board Roundtable--Part 4: Channel Changes,
MH&L Editorial Advisory Board Roundtable--Part 5: Talent Development is Your Job
ANDEL: Let's start our 2014 Roundtable by going into our archive and seeing what some of you said at last year's Roundtable. We picked out a few quotes that were particularly interesting.
Let's start with Jim Tompkins. Jim, in reference to reshoring you said , "companies that come back [to the U.S.] are not employing a large number of people because they are automating their factories. Employment is not going to come from manufacturing. The factories have been torn down or turned into health clubs and condominiums. The people who worked on those factories have moved on to something else."
Since then, Jim, we have read about overseas companies, especially car manufacturers, coming back and setting up shop in the U.S., particularly in the South. IHS Global Insight came out with a report that said, "manufacturing jobs will climb 3.2 percent this year as compared to 1.6 percent for all jobs." Do you still feel U.S. manufacturing employment is on a downslide?
TOMPKINS: What I said was absolutely true. What is happening is the economic process is working. China is pushing off low wage, dirty jobs to Southeast Asia and now starting into Africa, but there is not anything about a massive movement back to the U.S. There are still more manufacturing jobs leaving the country than coming back. We are seeing reshoring or near shoring where jobs are coming to Mexico. That certainly makes sense, and that's consistent with what NAFTA was put in place for. But off shoring of manufacturing from the U.S. is still significant.
Another consideration is the Panama Canal will reduce the cost of a container coming in by about 50 percent. We don't know what's going to happen with the canal charges, so there is uncertainty there, but shipping is not getting more expensive; it is getting quicker.
WILL: Jim brought in some interesting things about near-shoring and Mexico. There are some implications there, but with the Panama Canal expansion, that's also going to help the ports of Houston and New Orleans. And there are some issues with rail infrastructure there. In support of the Panama Canal, Norfolk Southern has taken the initiative to develop that infrastructure, double-stack more efficiently, and as we talked last year, I think Jim's quote was, of course, water is cheapest, then rail, then truck. So the expansion certainly is going to help get those products into the population centers. There is still some argument about putting freight bound for the West Coast on rail. The Wall Street Journal says it will take 36 days for products to come from Asia, depending on where you are going on the East Coast, compared to 25 days by going to Los Angeles and transporting by rail. So there is still some competition from the West Coast as far as rail, but when you start to look at New Orleans, Houston, and then population centers along the Mississippi River and, of course, places in the North and Northeast, it is certainly going to be a boon.
Listen to more from Jim Tompkins and Al Will about Panama Canal's implications!
