Exploring the Reality of Reshoring

December 18, 2013
Made in USA tag
Image Credit: Phil Roeder

There’s pride in that “Made in the U.S.A.” sign, and the reshoring trend is making U.S. businesses realize that there are advantages to sourcing products closer to home.

After decades of sending more and more manufacturing work to Asia – and particularly China – research on both sides of the Atlantic suggests that companies are reevaluating those decisions.

‘Reshoring’, the process of returning some previously offshored production  to a company’s home country, is beginning to take hold in not only the business world, but also the wider media.

Bringing Manufacturing Back Home

The stats support this notion, somewhat.

Across the pond in the United Kingdom, the Manufacturing Advisory Service (MAS) found that one in six U.K. manufacturers is bringing a proportion of its production home in 2013. Although quality and supply chain complexities factored into these decisions, the primary driver is, as always, cost. The massive expansion of the manufacturing business in popular Asian locations has permitted many suppliers to continuously nudge up their rates, helping to make domestic suppliers attractive again.

Back home on this side of the Atlantic, popular news segments such as ABC’s ‘Made in America’ mix with good old fashioned patriotism to encourage business owners big and small to think global but buy local. Domestic production has not widely reached a cost at which it can compete outright with countries like China and India, but reports suggest that the U.S. has already reached parity with neighbor Mexico, and could hit that status with its Chinese rivals as early as 2015. No mean feat for a supply chain proposition that would have received little attention just a few years ago.

Expectation vs. Reality

In reality, the dream of a resurgent U.S. manufacturing base is still some way from becoming a reality, as companies prefer to balance between domestic and foreign suppliers. This is a prudent supply chain decision that mitigates risk while managing fluctuating costs. Even so, the pendulum is undeniably swinging back in favor of U.S. suppliers.

In the longer term, public opinion and public officials may play a critical role in just how much business is brought back home. The realization that China is more of a competitor than a supplier these days has helped the movement gather steam, as had the desire of politicians to rekindle a sluggish economy.

If these factors continue to grow, and if consumers feel pride swelling within them and swaying them to buy American, reshoring could make “Made in the U.S.A.” a common sight once again. And as a proud American company, Capacity LLC will be happy to move those products to feed that demand!

 

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