When Reshoring Projects Fail

Not all reshoring projects are successful. Those that fail give us insight into mistakes and missteps that we can all learn from. Here is the recent story of Stanley Black & Decker, a very well-known brand of products including the Craftsman line of hand tools, sold to contractors and do-it-yourselfers for many years at Sears.

Craftsman Tools

Stanley Black & Decker embraced the concept of reshoring and pursued building a new factory in Dallas to produce Craftsman sockets, ratchets, and wrenches. Craftsman hand tools had previously been produced in factories in Mexico and China and required hand-finishing of the tools to meet the high-quality standards of the Craftsman brand.

A spokesperson for Stanley Black & Decker told FOX Business, “We endeavored to make Craftsman mechanics tools in a new and innovative way.” This included automated finishing – a process that had always been done by hand. In the quest to reshore this popular brand of tools, Stanley Black & Decker engineers worked with machine tool makers to develop new automation.

In 2019, Craftsman announced that it would build a $90 million facility in Fort Worth, Texas, that would employ up to 500 workers This strategy would be an opportunity to showcase Craftsman products that are “Made in the U.S.A.”  in response to American’s preference for goods made domestically. Through a new, fully-automated factory, production costs would be competitive with Chinese and Mexican factories.

The factory was scheduled to be producing Craftsman tools approximately 18 months after the groundbreaking of the Fort Worth factory. However, the pandemic and resultant supply chain issues caused significant delays. Then the newly designed automation didn’t work as planned, and in March 2023, Stanley announced that the Craftsman plant in Fort Worth would be closed to achieve cost-cutting. In the end, some production remains in Fort Worth, but the bulk of production was returned to Tijuana, Mexico.
Not the only failure

The Craftsman Tools factory is not the only example of a failed reshoring project. A few years ago, Otis Elevator attempted to open a new factory in Florence, South Carolina, bringing some production of commercial elevators back from Mexico. Although the unemployment rate was high in Florence at the time, when the factory opened, there were too few workers with the skills to run the new advanced machinery. Otis failed to plan for the skilled labor it needed. In addition, Otis tried to deploy SAP software at the same time as trying to establish a new production facility which caused further disruption and took an enormous amount of workers’ time. Otis limped along for a year and lost $60 million in sales.

These mistakes and others help provide guidance

We can learn so much from failures. For a successful reshoring project, you must plan for automation, skilled workers, quality control, and a longer-than-expected timeframe. A reshoring project is not straightforward and probably requires the assistance of a consultant and a cross-functional business team.

Even if your reshoring project is successful, it’s best to remember that you will also have to deal with leaving a foreign country and that is not easy. In China, for example, companies need a permit to leave the country and it may take some time to secure it. Companies may also have to pay out employment contracts, abandon machinery that was lent to suppliers, and be subject to IP theft. For more information on leaving China, check out our white paper https://reshoringinstitute.org/leaving-china-its-not-that-easy/.

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