Why Medtech Reshoring Is Picking Up Steam

A growing number of medical device companies are deciding to return production to the United States after reshoring it in years past. Here’s why. Qmed Staff In recent decades, China was able to capture a tremendous amount of business from the United States. In essence, this was because Chinese companies were able to undercut domestic manufacturers in terms of cost. Many companies were willing to put up with logistical headaches of having products shipped halfway across the world because it made financial sense–at least on paper. Now, the tide seems to be turning. Last year, the United States gained 10,000 jobs as a result of reshoring, according to a report titled “Reshoring Initiative Data Report: Reshoring and FDI Boost US Manufacturing in 2014.” By contrast, a decade ago, the country lost some 140,000 jobs to offshoring of manufacturing. While some companies have had good success by offshoring operations like molding to China, others have been less fortunate. There have been many companies who have lost precious intellectual property. In the automobile sector, Jaguar, for instance, recently had one of their Land Rover models copied by a Chinese company, which will retail in China for one third of the price as the Land Rover vehicle. Stop by C&J Industries’ booth (#1574) at MD&M East in New York City, June 9-11, 2015. Storage conditions in many Chinese facilities are not climate controlled and, as such, it is common to see rust and corrosion on returned molds stored in them. Image courtesy of C&J Industries. Many medical device companies that have outsourced production to low-cost destinations have run into similar headaches. And that is helping to drive those firms to return production to the United States. In the following Q&A, we speak with Mark Fuhrman, director of sales and marketing at C&J Industries Inc. (Meadville, PA), a company that has helped numerous companies reshore molding and tool-making operations to the United States. ( The company is exhibiting in booth #1574 at MD&M East. ) Qmed: What are the main reasons you think companies are returning production back to the United States? Fuhrman : Companies are returning production back to the United States for the same reason they left in the first place: profitability. The value proposition of off-shore manufacturing has been greatly reduced by rising foreign labor costs, supply chain inflexibility, and IP concerns. Some of our customers are now facing the reality that although shipping and freight costs may not be embedded in their standard cost system, they are coming to realize that transportation is a very real cost. Some are absolutely shocked to see the impact of landed costs from overseas. Qmed: I once heard of a Chinese molder that got angry with a U.S. company and ended up putting its tools in a barn . Are you seeing many companies interested in reshoring that come to you with negative stories like this? If so, would it be possible to list an example or two? Fuhrman : When dealing with foreign tool builders and molders, if a U.S. company decides to move their tooling, they have to know that their assets won’t be shipped until paid in full. I can’t speak to any unusual stories about tools being held ransom in some unusual way. General storage conditions in many Chinese plants are not climate controlled–so rust and corrosion is fairly common to see on returned molds. If you haven’t physically been to China, it’s difficult to describe the variety of conditions that exist in their tooling and injection molding facilities. Just as there is quite a variety in U.S. manufacturers, the range in China is quite a bit greater. The first time you visit a Chinese tool builder or injection molder, I promise that you will say, “Wow!” about 20 times a day. The best way to describe manufacturing in China is: The Industrial Revolution meets the Wild, Wild West. A section of a water bottle is being used in this image as a hopper. Image courtesy of C&J Industries. Qmed : Many U.S. companies are bringing their molding and tool production back home after offshoring it to low-cost destinations like China. How do you see these Chinese molders reacting to this trend? Fuhrman : Some of our customers still see the benefit of having tools built in China, but have the molding done in the United States. So what we’ve seen happen is that the Chinese mold builder is more than happy to take our customer’s money, build a […]

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