According to Investopedia, “Reshoring is the process of returning the production and manufacturing of goods back to the company’s original country. Reshoring is also known as onshoring, inshoring, or backshoring.” This is the opposite of the offshoring that many companies were doing over the past few decades to try to take advantage of a lower cost of labor. However, after the 2008 recession and the manufacturing employment low of 2010 in the U.S., it became a priority to find ways to stimulate the domestic economy and the practice of reshoring was born.
Over the past decade the rate of companies choosing to reshore has been on a steady incline, but the COVID-19 pandemic created new interest, and reshoring activities hit a record high in 2021. In fact, according to GlobeSt.com, “Reshoring is on track to create more manufacturing jobs in the U.S. than foreign direct investment for the third year in a row in 2022.”
One main proponent of reshoring is The Reshoring Initiative, whose mission is “to bring good, well-paying manufacturing jobs back to the United States by assisting companies to more accurately assess their total cost of offshoring, and shift collective thinking from ‘offshoring is cheaper’ to ‘local reduces the total cost of ownership’.” The Reshoring Initiative 2021 Data Report gives further insight into why this is such an important issue at this time:
“When the Reshoring Initiative was founded in 2010 the U.S. was finally beginning to recognize the negative impacts of offshoring, like the destruction of the blue-collar middle class, the loss of intellectual property, the reduction of innovation, financial miscalculations from using price instead of total cost, and the peril of accruing a massive national trade deficit. While these issues remain highly relevant, the recent developments of the pandemic, the Russian war on Ukraine (and the free world), risk of China decoupling, and the climate crises present a world that has dramatically changed. A strong U.S. manufacturing base used to signify economic prosperity and competitiveness, but today with the heightened need for national security, sustainability and self-reliance, reshoring of U.S. manufacturing, has become, quite literally, a matter of survival.”
The Reshoring Initiative has collected 8,000+ reshoring articles, available at https://reshorenow.org/main-reshoring-library/, where you can explore specific details about reshoring companies.
Here are some of the ways businesses can benefit from reshoring:
- Risk Mitigation
The new industry reality is to prepare for the unexpected. Whether it is a supply issue, an economic cycle swing, or a pandemic, ensuring your operation has the right automation solution, and that you have close control over it without the need to travel (such as in the case of a global pandemic) will mitigate operational disfunction or disruption risk.
When production is offshore, it increases the amount of lead time required to create and launch a new product due to longer delivery times. If customer demand changes unexpectedly and you want to quickly implement product changes, an offshore operation may not be able to meet this demand. However, reshoring allows for reduced lead times and simplified supply chains, and allows for much greater flexibility in your manufacturing operations.
Shipping parts and / or finished products from overseas can cause some delays just due to the complexity of the process (transportation, customs, and more). However, when global events cause even further delays, such as when your items are sitting in a container ship and cannot get to your customers, it can be very problematic. However, if your parts and products are all in the same country as your customers, these issues are greatly reduced.
- Supply chain constraints
There have been wide-reaching supply chain disruptions beginning with the COVID-19 pandemic and continuing into 2022 due to current world events. Some companies have been reshoring their supply base to gain better control over how much or little they will be affected by these or similar issues.
At Wes-Tech, we have the ability to help you as you consider reshoring. Here are a few of the services we offer:
- Highly flexible and dynamic ability to meet the demands of mid project product changes.
- Keep process development and innovative Intellectual property secure.
- Reduce product containment WIP when quality issues arise.
- Increase profitability with risk adjusted ROI of capital expenses.
- Increase brand loyalty with “Made in the USA” recognition.
Whatever your reason for considering reshoring, the Wes-Tech team can help you get to the right solution for your operation by helping ensure your facilities and automation capabilities fit your production needs, your budget, and your timing. Contact us today for a free consultation.
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