Reshoring: It’s Time to Bring the Work Back Home
Reshoring, or the idea of bringing manufacturing services and supplies back to the United States from overseas, has been bandied about in manufacturing corner offices, at political rallies and around workplace water coolers for decades. The general thought is: bring those manufacturing jobs back home. In an ideal world, everybody wants that, right?
But for many manufacturers, the economics were just too tough to get around. The ability to purchase supplies or get the job done for pennies on the dollar overseas in places like China meant bottom line stability and growth here at home. It simply wasn’t possible to afford to produce those goods at home.
Enter the chaos of COVID-19 and reshoring got a reconsideration. A serious reconsideration.
Every person and nearly every industry in this country has been impacted by the supply chain disruptions caused by the pandemic. Manufacturing, perhaps, most of all. Manufacturing slowed to a crawl and even ground to a halt because overseas supply chains snarled and closed. Layoffs happened, and once-busy shop floors became eerily quiet. And even when supply made it out of places like Asia, hundreds of cargo ships idled off shore here because they couldn’t enter our ports. As a result of those bottlenecks, consumers found nothing on the shelves, waited months for items like new furniture, books or electronics and — let’s all admit it — hoarded toilet paper.
Now, for manufacturers, the question isn’t whether they can afford to reshore their supply and, in some cases, operations, it’s whether they can afford not to. With the pandemic, climate disruptions, and current international instability, it is plainly crucial to locate closer to home.
The New York Times highlights these recent reshoring developments:
- General Motors announced in December that it is considering spending $4 billion to expand its production of electric vehicles and batteries in Michigan.
- Toyota announced plans to build a $1.3 billion battery plant in North Carolina.
- Samsung is building a $17 billion semiconductor plant in Texas, its largest-ever investment in the U.S.
Other factors contributing to the reshoring resurgence
While the supply chain disruption is clearly the driving force of the reshoring discussion, other factors are increasingly coming into play as well.
Sustainability. Customers are increasingly committed to buying goods that are manufactured with sustainability in mind. They want transparency and to know where and how products are made. It’s also important to reduce the carbon footprint of manufacturing, transportation and pollution. Knowing a product was sourced and manufactured in the U.S. rather than transported across the ocean is becoming more and more important to consumers.
Trade tensions. The trade and tariff war with China started by the Trump administration has been percolating for a while now, but the current international instability is making it poised to bubble over. With China leaning support towards the side of Russian in the invasion of Ukraine, we can expect to see trade sanctions imposed.
Subsidies. Both sides of the political aisle agree on the desirability of manufacturing more goods at home. Subsidies for manufacturers seeking to reshore are leveling the playing field.
National security. During the height of the pandemic, supply chain disruption caused panic among consumers and real hardship among health care workers who couldn’t get the PPE they needed to do their jobs. That kind of nationwide instability isn’t simply an inconvenience; it’s a matter of national security.
A big boost to the economy. Twenty-five years ago, U.S. factories employed some 17 million people. In 2010, that number had dipped to 11.5 million, and today has crawled back up to 12 million. More manufacturing at home means more manufacturing jobs. And for the economy, that’s a great thing. We don’t have to tell manufacturers this truth: Manufacturing is one of the only industries where people without a four-year degree can make great money. More manufacturing jobs will mean a big shot in the arm for the middle class in this country.
With more and more companies bringing manufacturing and supply back home, they will need help optimizing their processes to ensure efficient operations. At USC Consulting Group, we have more than 50 years of experience helping manufacturers find opportunities for greater efficiency and productivity. Call us today to talk about how we can help.
