Towards a return of Made in America products?
Are cosmetic packaging and formula suppliers ready to relocate their production in the USA? That’s the big question. For at least two decades, the U.S. cosmetics industry has more and more relied, for its packaging sourcing on low-cost countries, notably from Asia, and in particular China, but also Mexico, to take advantage of low labour costs, strong available capacities, and high responsiveness.
This resulted in the relocation of entire industry sections, particularly packaging. Is a return to homeland possible? European Companies, at least for several of them, also intend to join in. This will be the theme of the round table to take place on Tuesday, 19 September from 3:30 pm to 5:00 pm. Save the date!
Over the last two decades, suppliers, historically present in the U.S. territory have – for those who had production sites – transferred most of them to their proprietary sites in Asia, while the ones who did not have any operations as such, on the Asian continent, signed partnerships with local suppliers. Other U.S. Companies banked on the ‘near-low cost’ by settling in Mexico.
And finally some simply disappeared. In the end, the result of these changes was a massive reduction in production capacity in the US.
However, since then, the situation has changed significantly. China’s forced economic and social development has resulted in a significant increase in labour and energy costs, and production costs in Asia are now close to those in Western countries, especially when logistics costs are taken into account, to the point that this source of supply has lost its ‘low cost’ attractiveness.
Moreover, the development of these “former” low-cost countries has resulted in a staggering increase in domestic demand.
For example, the Chinese cosmetics packaging industry has shifted from an export-dominated model to a predominantly domestic industry. A large part of production capacities are now dedicated to satisfying local demand, with as a consequence a reduction in the responsiveness and flexibility readily available for Western customers.
A clear trend towards relocation?
On the US side, the economic and social situation has evolved in an opposite direction, and this Asian dependence for its sourcing, has generated logistic, economic and social issues, which have helped bring to light the new balance and fuelled many debates.
The trend is now clearly for a relocation of production on the U.S. territory.
In practice, however, the industry is facing a huge challenge, because it is much more difficult and time consuming to recreate the required capabilities and skills, than it was to let them go. And the cosmetic packaging industry requires a great number of complementary skills and know-how: technologies, mastery of materials and decoration techniques, and various other specialities, considering that this industry relies on dozens of different specific trades.
Participants to the round table below will review the leeway available for the U.S. cosmetics industry and prospects in the short term.
The roundtable – Tuesday, 19 September – 3:30pm – 5:00pm
“Products Made in The USA – How American suppliers are shinning and innovating to be at the forefront of international competitiveness?”
For the last two decades at least the US cosmetic industry has more and more relied upon overseas sourcing, notably from Asia. The local industry has symmetrically shrunk, as many packaging and formula suppliers invested in operations in low cost countries rather than in the USA, or even exited the industry.
An opposite trend is strongly developing nowadays. Economic and social development in once developing economies has eroded the cost benefit to source overseas and skyrocket local demand has claimed its share of the available capacity. Conversely, the USA are witnessing a strong will for re-localizing jobs and supply, which is likely to affect all industries.How is the cosmetic industry preparing for that switch? Indeed this industry is a complex one, involving a wide variety of materials, technologies, know-hows… Are all the required capacities and competencies readily available? What are local and global players planning in terms of capacity and expertise?
Introduction: Business overview by Gerald Martines, In.Signes
Part 1: Conference with Packaging Manufacturers based (also) in the US:
– Brad Thompson, President Geka USA
– Holli Montgomery, MD Schwan Cosmetics US
– Vincent Groccia, VP Americas of Texen
Part 2: Conference with Formulators / Full Service Providers based (also) in the US:
– Judy Zegarelli, Founder/Creative Director at Cosmetic Group USA, Inc.
– David C. Chung, Owner & CEO of Cosmetic Lab
– Jung-mi Lee, Manager of Global Technology Research Team at Kolmar Korea
– Vittoria Cicchetti, CEO of Regi
Part 3: Round table with conclusion
Moderated by Gerald Martines and Charles-Emmanuel Gounod with the support of “neutral” key executives from the US Beauty Industry like:
– Bill Kunz, President Kunz Consulting Services