Podcast: How to navigate your supply chain through constant disruptions

Supply chain managers are employing a number of strategies to address the almost constant changes due to disruptions in the supply chain. Michelle Comerford, practice leader for the Industrial & Supply Chain practice at Biggins, Lacy, Shapiro & Company, explains what actions companies across the country need to be taking to stay on a steady course to supply chain proficiency.

Below is an excerpt from the podcast:

AS: In light of the tariff situation and the emphasis on domestic production, what are you seeing across the country in terms of increased domestic production? And are companies expanding lines at current facilities, or are they looking to build new ones?

MC: We're really seeing a combination of scenarios, just depending on the company, but all as a result of this increased demand for more “Made in the USA” products. Companies that have existing facilities in locations where they feel they can add capacity, find more workers, and have room to expand — many of them are adding new lines. Others that are landlocked or concerned about the ability to add more workers in their current locations are considering other, new locations to add a second facility — which might also help them reach more customer markets more efficiently. So there’s added benefit there.

It really depends. But we're also certainly working with a number of companies that are, I’ll say, “first time in the U.S.” situations. Some of those are U.S. companies that were always outsourcing their production, and some are foreign-based companies that were exporting their products into the U.S. but now have an established U.S. market — and thus a business case to invest in a U.S. plant. So it’s really kind of running the gamut depending on the company. And that’s where site selectors are really helping a lot of these companies evaluate their different strategies.

AS: Okay, especially in manufacturing — but really in all new facilities — labor shortages have existed and continue to exist. So one of the big questions when it comes to either reshoring or increasing production here is: where are these companies going to find the workers?

MC: To quote your series title here, it’s a great question to ask — because it truly is a challenge. But there are a couple of dynamics at play.

One: today’s modern manufacturing plant has a lot more automation and technology in the production process, so not as many people are needed per facility. That said, they still definitely need people. And in fact, they need them to have higher and better skill sets in order to operate and maintain that equipment. So this is opening up higher-paying job opportunities and career paths for people. But we, as a country, still kind of need to adjust to that mindset — of looking into the opportunities in manufacturing environments, particularly for our young people.

So there’s going to be a bit of a gap here while that continues to happen. Some communities and local areas have done a good job of that over the past decade or so — encouraging young people into the manufacturing fields, really connecting with their local businesses, and setting up strong technical training programs to promote those pipelines.
But we still need more areas and more communities to put more effort into that. So it’s going to be a bit of a challenge in the near term, for sure.

That said, we are finding great opportunities for our clients where states and communities are setting up custom training for them, and that’s really helping with the investment decision. As that production plant is getting built and up and running — which takes a couple of years — the community is also building up a job training program to help align with when they’ll start hiring.

AS: Tagging along with that, a lot of times, communities will offer incentives for workforce and training to companies. Do you see those incentives continuing, as well as other incentives for building in new locations?

MC: Absolutely. I mean, the topic of incentives is a big one. And I think, first, it’s really important to understand the role of incentives in site selection. So, first of all, they should never immediately drive your site selection effort or your evaluation of options. They really need to be viewed as a tool to help close the deal — or close the gaps — or fill in where those gaps exist with your finalist list.

That example you just mentioned about workforce training — that’s a perfect use of incentives. It’s a perfect example of how valuable incentive programs can be when they’re investing in job training, workforce facilities, or custom training that can help fill that risk issue a company might have in their head about a certain area — where everything else is lining up: the site works well, the logistics work, the utility capacities work. So that can be a great solution to help fill that gap.

Other incentive programs we’re seeing might help fill other gaps, such as utility infrastructure or road infrastructure that needs to be upgraded or improved in order for a new plant to go there — and have the right-size water line or wide enough roads for trucks and things like that. So we’re still seeing incentives certainly filling those roles. And of course, for some of the larger projects, things like tax credits are also helpful in the deal.

We’re definitely seeing a shift across the country to more performance-based incentives. So rather than providing a company upfront with grant dollars, they’re receiving that support over time as they add jobs or make investments. There’s a tie to specific performance indicators, and that’s helping alleviate some of the risk — and some of the headlines we’ve seen in the past — where a company might receive an incentive and then their plans change, and they don’t move forward. Nobody wants that.

So, definitely more of a performance-based incentive mindset across the country, but still an important tool in finalizing site selection decisions and ultimately the cost of the deal for our clients.

AS: Maybe talk a little bit about logistics — as far as adding to the supply chain with more production coming back. What’s happening with that, and what changes are you seeing in the rail and other parts of the logistics industry?

MC: Logistics are a big part of the equation when it comes to site selection for manufacturers. Companies — especially those that are reshoring or coming to the U.S. for the first time — are likely still needing to import some parts and supplies if that supply chain doesn’t already exist in the U.S. So, in the meantime, while they try to build that up domestically, they’re going to need to import — or maybe it’s a certain material that you just can’t source domestically.

So proximity to ports is on the minds of some companies. Also, in terms of potential export of finished products, port access can come into play. Airport access too — either for cargo needs or for people, you know, bringing in management and customers — can also factor in.

And then, of course, on a site-specific level, there’s access to highways and interstates — how quickly you can reach customer markets within a day’s drive, things like that. Some of those things are certainly competing with trends happening in the transportation industry. So just like we’ve seen shortages of manufacturing workers — having that gap in meeting the demand for those kinds of workers — now we’re seeing that also in truck drivers. That’s been a challenge, particularly on the long hauls, right? So where companies are strategizing around logistics is in how they can lessen the need for long-haul trucking. It’s just more expensive and harder to find drivers willing to do those cross-country runs, that sort of thing.

In some cases, companies are looking more to rail. You know, it’s going to take the right type of product to do that, for the most part. Typically, things that are not perishable or not as time-sensitive are more likely to consider rail as an option. Whether or not they need direct rail access to their plant depends on what they’re doing and the quantities they need. More often than not, at least proximity to an intermodal terminal will help lessen the need for trucking across the country. So they might not need direct rail access to their plant — and, in fact, depending on the rail service provider, they might not be willing to give them direct access unless they have unit-train-size demand.

But it’s all kind of folding into efficiency, cost, sustainability — you know, how can companies be more efficient in all those aspects? So we’re seeing more of them consider rail, but again, not necessarily needing rail-served sites for their plants. Which I think is also important to note, because that can limit your site selection efforts. There just aren’t as many rail-served sites out there. So if that’s a need, we really work with our clients up front to understand — is that a requirement, or a nice-to-have? Because if it’s a requirement, it’s definitely going to limit the options.