Rotational molding is ripe for re-shoring

Due to a variety of factors, including the typically larger size and bulk of its products, relatively higher per-part shipping cost and its comparatively low-volume production, rotational molding has historically been a regional manufacturing business, in which customers commonly source their products with rotational molding manufacturers located within relatively close geographical and logistical proximity of their respective businesses, distribution hubs or market concentration. Other factors such as the advantages of proximity to supply chain partners and the somewhat idiosyncratic nature of the rotational molding process contribute to this regionality phenomenon and have precluded widespread migration of rotomolding manufacturing to offshore locales.

Despite this, and concurrent with the rapid modernization and rise of the Chinese economy in the late-80s and 90s, some level of rotational molding production was offshored from the U.S. to China and elsewhere, where a significant portion remains to this day. Seeking cost and margin advantages in doing so, domestic manufacturers in a variety of roto-intensive sectors, including industrial floor care, toys and household products, blower and cooler fans, insulated coolers, etc. established overseas supply chains and navigated significant political, cultural and logistical challenges to execute their respective offshore manufacturing strategies.

Declining cost advantages of offshore manufacturing.

However, in a pattern that began pre-pandemic and has accelerated since the onset of the ubiquitous phrase “unprecedented supply chain disruption,” U.S. companies are decisively deploying re- or near-shoring strategies in returning the manufacturing of their products closer to or all the way home. In considering the impact of the re- and near-shoring dynamic as it relates to the rotational molding sector, Xcelerant Growth Partners spoke with manufacturing re-shoring expert, Mr. Jeffrey Cartwright of Shoreview Management Advisors, to gain his perspective on this phenomenon.

In addition to founding Shoreview Management Advisors and acting as its current President and CEO, Cartwright previously served as President and COO of Igloo Products, where among other initiatives, he oversaw the in-house production of Igloo’s proprietary line of high-performance rotationally molded coolers, while near-shoring manufacturing of other product lines from Europe and China to North America, lowering manufacturing costs, correcting recurrent quality issues, accelerating speed-tomarket of new product launches and streamlining a fragmented supply chain in the process. Cartwright’s familiarity with the rotomolding process, combined with his knowledge of global economics, geopolitical dynamics and deep roots in manufacturing have helped Shoreview establish a unique niche among re-shoring consultants.

Though Cartwright’s work also involves other manufacturing sectors, he believes that re- and near-shoring of rotational molding will similarly accelerate and intensify due to a combination of factors. “For one thing, costs have been escalating steadily in China for a number of years,” comments Cartwright, “and compounded by the imposition of tariffs of up to 25%, the cost advantage of manufacturing in China has been significantly negated.”

The case for near-shoring in Mexico.

From a macro perspective, the numbers clearly demonstrate that re- and near-shoring activity continues to accelerate. “Over the past several years, Mexican suppliers, for example, have seen a huge uptick in manufacturing bids from U.S. manufacturers –approaching a 500% increase compared with the pre-pandemic timeframe,” said Cartwright, “and during this same time, U.S. bid activity with Asian suppliers has decreased more than 25%. And we anticipate this trend continuing and accelerating through the foreseeable future.”

While rotational molding has been a vibrant manufacturing sector in Mexico for 50+ years, with a predominant focus on water storage tanks (“tinacos”), cisterns, agricultural tanks and hoppers, the past two decades have witnessed highly engineered, valueadded products capture a significant portion of the rotomolding output. This growing sector of higher-tech rotomolders in Mexico has aggressively invested in sophisticated product design and engineering resource, ISO and quality systems, advanced machinery and processing equipment, precision tooling, secondary operations, etc. to deliver valued-added products to a wide variety of end-use sectors, including consumer products, toys, housewares, insulated storage bins and coolers, lockers, dimensionally precise agricultural tanks and components, industrial floor care, construction equipment and other products demanding sophisticated product design and rotomolding capabilities.

As the Mexican rotational molding sector has made measurable strides in terms of overall capacity, capabilities and competitiveness, multiple additional factors combine to enhance Mexico’s preparedness and positioning to effectively absorb a nearshoring manufacturing boom.

“Obviously, for the U.S.-based company, Mexico is much closer to home,” commented Cartwright. “Mexico operates in the same time zones, has efficient and cost-competitive labor, streamlined supply chains, and offers a huge logistical advantage in terms of freight costs and delivery lead times.” Though the cost and lead times of ocean-bound container shipments have stabilized since spiking during the pandemic, Mexico’s logistical advantage in this regard is not insignificant.

Of additional note is the potentially volatile geopolitical dynamic in Asia, with increasingly bellicose posturing and heightening rhetoric predictive of pending conflict. While still hopeful that diplomacy and cooler heads will prevail, any level of military activity in the region will most certainly disrupt Chinese manufacturing, and by extension, the production and shipment of U.S. products manufactured there.

“If hostilities break out, the supply chain that exists on that day will be ruptured to the point that it will take years to repair,” opines Cartwright. “To start a near-shoring strategy then will be too late, making it imperative that the process begins sooner rather than later.”

Bring it home. Or next door. ASAP.

For domestic companies utilizing an offshore manufacturing strategy, including products featuring rotationally molded components, macro-economic factors catalyzed by pandemicrelated disruption and geopolitical concerns have combined to optimize the timing to deploy immediate re- and near-shoring initiatives. Though not without its challenges and complexity, the rationale for re- and near-shoring manufacturing is increasingly clear and gaining momentum. As Cartwright summarizes, “considering all factors, including potentially volatile dynamics in Asia, combined with Mexico’s readiness, proximity and costcompetitiveness, a strong case can certainly be made for nearshoring, and for doing it now.”