Four Reasons Why Reshoring is Gaining Traction in the U.S.

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Why Reshoring Is Gaining Traction in the U.S.

The reshoring or onshoring trend has been gaining momentum for years as large and medium-sized companies have been rethinking the entire value chain and moving more manufacturing back to the U.S. and North America. The Reshoring Initiative says American companies are on pace to reshore nearly 350,000 jobs in 2022 and this would be the highest number on record since the organization began tracking this metric in 2010.

So is onshoring a good idea for your company? If so, what will it take to make it happen?  There are many reasons—from economic to logistical to quality and control—that you should consider onshoring:

Reason #1: Total Cost of Ownership

Countries like China perform much of the offshore manufacturing, but even in third-world countries, employees are demanding better pay and benefits. Plus, China is entering an advanced manufacturing phase, which will increase salaries and overall costs of goods. Fuel costs tied to long-haul supply chains have started to moderate, but uncertainties remain. For the last five years, companies are starting to evaluate the total cost of ownership of products. If you’re looking for reshoring cost evaluation tools, visit the Society of Manufacturing Engineers and the Reshoring Initiative and its total cost of ownership estimator.

Reason #2: Quality Products

Quality manufacturing has always been a challenge for mid- to large-sized companies relying on offshore production. At best, poor product quality causes customer satisfaction issues; at worst, they can cause injury or death—putting your company at great risk. While issues tend to be with tier 3 and 4 companies (those that supply sub-components to tier 1 and 2 manufacturers) and revolve around capacity, it is still a very real concern. Is it worth taking the chance to save money?

Reason #3: Automation Technology Costs

Automation has a bad perception when it comes to reducing jobs, but technology advances over the last ten years have changed the playing field for mid-size manufacturing. How? Automation technology is much cheaper and accessible in 2022 than it was in 2010. It’s not just robotics, as many companies have invested in sensors, collaborative robots (much cheaper), data networks, IoT, and inexpensive controllers that can reduce workforces and the price of goods.

With these advances, mid-size companies will continue to evaluate automation and digital transformation in producing goods. And, of course, connecting plant floor networks to Microsoft Dynamics 365 Business Central allows for data sharing and lowering costs.

Reason #4: More Trade School Support Could Help Local Businesses

The country of Germany is known for its emphasis on trade schools and promoting vocational skills to enable more manufacturing in the country. The situation isn’t the same here in the U.S., as many technical schools or community college programs have languished since the early 1990s. U.S. consumers want to buy products made in their country to support domestic manufacturing, but more workers are needed.

The Reshoring Institute predicts more than 2.1 million new jobs by 2030 with reshoring and other favorable policies like private/public workforce programs. With favorable public support for U.S. made products, this should only help drive more government incentives to assist community colleges and vocational programs. Plus, the new U.S. Inflation Reduction Act’s focus is on domestic manufacturing and should only help in creating more public/private workforce programs.

One Final Note

Still not sure? Learn more about why you should consider reshoring and how you can do it. Download our eBook, Reshoring Your Manufacturing Operations: Is It Time…and Are You Ready?

 

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