How Ecodev Persuades Companies To Bring Manufacturing Back To The U.S. (Hint: It's Cheaper)

Ecodev, a Minnesota-based economic development consultancy, helps American businesses see that manufacturing products stateside isn't just a matter of national pride, it's good for their bottom line.

In the last decade, Americans' perception of domestic manufacturing has done a 180. "10 years ago, customers were demanding that their companies operate overseas because they thought they'd get a cheaper rate," manufacturing consultant Dana Olson says. But a swell of national pride and increasing sensitivity to the health of the environment have conspired against foreign manufacturing. "Now companies would much rather manufacture in the U.S. for loyalty as well as cost savings."

A new factory opening in Devils Lake, North Dakota, will bring 500 jobs to the city over the next five years.

As president, CEO, and founder of Ecodev, Olson assists companies that want to expand, relocate, and consolidate their manufacturing within the United States. Lately, Ecodov has also helped American companies bring their manufacturing home. Last month, Olson's company announced that one of its clients, Minnesota-based Ultra Green, was moving production of its biodegradable paper products (including plates and serving utensils) from China to the United States. A new factory opening in Devils Lake, North Dakota, will bring 500 jobs to the city over the next five years.

Ultra Green CEO Mack Traynor says Ecodev helped his team envision how their products could be efficiently produced in the United States--something they'd thought was improbable. "We realized that if we could find the source of raw material in the U.S. that would be comparable and if we had the proper automation and good old fashioned American ingenuity, we could be competitive with a domestic plant in our own backyard," he says.

While companies like Ultra Green come to Ecodev listing various reasons for wanting to make changes, Olson says it comes down to three issues: cost, convenience, and trust. Ecodev creates a comparative financial model for relocation, factoring in various metrics like quality and production time, and often uncovering hidden costs from energy and transportation.

In the case of Ultra Green, Olson discovered at one point they were shipping wheat straw from the United States to China, processing it there, and shipping the final products back to the states. Ecodev issued a request-for-proposal to various wheat-producing communities in the United States, and North Dakota came up as one of the biggest suppliers. Devils Lake quickly stood out for its dedication to the company's values as well as a lucrative economic incentive package to bring business to the area. "They have been tremendous," says Traynor of Devils Lake. "The welcoming committee has been outstanding."

In most cases, it's not cheaper for American companies to operate overseas.

Ecodev is a small boutique business, only taking on 10 clients last year, but Olson says their work is also about correcting perceptions of manufacturing, namely, the myth that's been perpetuated throughout the industrial world that domestic production can't be cost-effective. "These companies are convinced that going overseas was going to save them money," he says. "In most cases, it's not cheaper for them to operate overseas." Although he works with mostly mid-sized companies, he thinks that larger corporations also should take a cue from the changing tide of consumer preference. "If a company is global like Apple, you should be producing in multiple countries, but the U.S. should be one of them," Olson says.

Beyond the pride of placing the "Made in the U.S.A." label on his product, Traynor thinks he'll be able to reach a broader audience when production returns home. Increasingly, governments and corporations mandate that certain supplies they purchase be produced in the United States--a trend that's expected to continue apace, Traynor says. "This opens up many new markets and new opportunities that we wouldn't have had," he says. "These are new customers for us." Manufacturing domestically also helps builds a stronger brand on the environmental front. "All the companies we work with believe that to be true,"  Olson says. "For Ultra Green in particular, they're now going to power their plant with a windmill and foster a green product that's made in America."

Now that there's an opportunity for decent manufacturing jobs, people want to move back.

Only a few of Ultra Green's top management and technical experts will move from Minnesota, so most of the 500 hires will be made locally in Devils Lake. But Traynor, a Fargo native, has noticed another interesting phenomenon that has made him even more proud of his decision. "We've got calls and resumes sent in from expats--folks who used to live in North Dakota who want to come home," he says. "Now that there's an opportunity for some decent manufacturing jobs, they want to move back."

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[Image: Flickr user Kevin Lallier]

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