Reshoring is the process of bringing outsourced jobs back to their home countries. It has become an increasingly popular trend in recent years in an effort to strengthen the American economy. This shift in business strategy can offer a wide range of benefits to businesses, both large and small, from increased efficiency and improved customer service to increased job opportunities and a boost to the local economy. Reshoring can help a business to achieve a variety of goals. This article will discuss the advantages of reshoring.
Advantages of Reshoring
Bringing outsourced jobs back to the home country has a lot of benefits. Here are some of the advantages.
1). Comprehensive Control Over Products and Quality Levels
One of the main benefits of reshoring is the total control it provides over the products and the quality standards of the production process. Businesses can better control the quality of their products, from raw materials to finished products than they could if their goods were produced in a country with more lenient quality standards. Reshoring enables greater direct control over the production process, enabling companies to modify production schedules, gauge quality levels, and ensure that goods meet industry standards.
2). Streamlined Logistics
Extended transit time is one of the main hazards associated with offshore. From a manufacturing standpoint, the product is regarded as complete once it is in transit. If a batch has a problem when it arrives, you now have a multi-week supply of products that have already left the supplier but have not reached your facility. Suppose there is an undiscovered fault that was not detected in manufacturing. In that case, you now have at least six weeks of difficulties, including storing and repairing defective products, lost revenue due to the disruption, and resolving a surge in customer complaints.
3). Increased Skilled Workforce Availability
In the United States, millions of talented and highly qualified professionals are looking for jobs. Employees at every level are ready to conceive, produce, and develop genuinely cutting-edge goods thanks to American workers’ overall work ethic, which is difficult to match.
4). Simpler Supply Chain Management
Working with local suppliers can significantly increase efficiencies on multiple levels. By reshoring all operations, many critical supply chain issues are simplified. For example, transport networks are more familiar, allowing for easy tracking; customs complications and tariffs are eliminated, and delivery times are greatly reduced.
Issues with language barriers, drastic time differences, and variations in quality standard values are also avoided with domestic suppliers.
5). Less Complicated Facility Management
Globally distributed businesses know the difficulties in even the most basic connections. A sizable operating footprint comes with several distinct costs, hazards, and organizational fatigue when working with an offshore office.
When your operations are spread out across the globe, it is much more difficult to maintain consistency in production methods and quality assurance efforts.
6). Greater Availability and Affordability of Resources
All around the United States, dependable resources are accessible. The United States is the largest oil producer in the world as of 2019, according to the U.S. Energy Information Administration (EIA). This breakthrough has decreased prices for numerous manufacturing-related expenses, with logistics and transportation being the most significant.
Energy distribution in the United States is extremely reliable compared to other countries. This reliability means that businesses do not have to worry about losing access to electricity, water, and other natural resources required for production.
7). Reduction of Taxes and Tariffs
Even though it’s expected that the United States may establish fair trade agreements with other nations in the upcoming years, rising tariffs have caused disruptions in international trade. When offshoring because popular, many businesses were able to absorb the costs of tariffs and international taxes; however, with the increase in tariffs, businesses have had to pass those costs along to the customer, damaging their customer relationships. Reshoring eliminates these issues and allows businesses to keep costs low for customers.
8). Less Legal Headaches
While American business laws can be complex, it is much easier to manage one legal system as opposed to multiple legal systems when operating offshore. Operating solely within the American legal system provides greater stability for your business long term.
9). IP Protection
Globally, intellectual property is less protected than it is in the United States. The safeguards available in the United States and Europe are significantly better than those in many other regions. If your intellectual property is stolen, you have more options for recourse in the United States than you would in other countries.
10). Putting America First
Bringing manufacturing efforts back to the United States supports the future of manufacturing in our country. There are benefits to reshoring on both the manufacturing and the consumer sides. Reshoring creates more job opportunities in many trades, allowing skilled workers to lend their talents to producing high-quality products. On the other hand, many American consumers place great importance on purchasing American-made products. Both creating jobs and increasing American spending boost national and local economies.
Reshore With American Industrial
Today, more than ever, the outlook for manufacturing in the United States is favorable. The factors that once made lower-cost, offshore manufacturing attractive have shifted, and public opinion suggests that consumers are willing to pay more for items created in their own country. There is a renewed interest in reshoring for all the reasons listed above, and time will tell where these attitudes will lead businesses. To learn more about reshoring, contact us today.
Over time, manufacturing industries shifted production from the United States to countries like China. Offshoring, the practice of moving a company’s manufacturing facilities overseas, began in the late 1970s. Many companies made the move to capitalize on lower labor costs and lenient environmental regulations in foreign countries, thus enabling them to generate higher profits for shareholders. However, manufacturers are bringing manufacturing services back to the land of opportunity to strengthen the U.S. economy and help balance trade and budget deficits. Learn more about the concept of reshoring and how this decision benefits the U.S. manufacturing industry.
What Is Reshoring?
Reshoring refers to returning manufacturing services from foreign countries back to domestic facilities, closer to the target consumers. This migratory process is also referred to as inshoring and backshoring. When companies reshore their manufacturing services to the U.S., this is an optimal way to strengthen the economy domestically, quickly creating well-paying domestic manufacturing jobs. It can also reduce the total cost of production and make manufacturing more efficient.
Recognizing the importance of domestic manufacturing, in the year 2010, Harry Moser established the Reshoring Initiative with the specific purpose of bringing quality manufacturing jobs back to this country. This industry-led effort aims to help companies understand how local sourcing and manufacturing affect the U.S. economy, and how reshoring can greatly benefit their business.
How Does Reshoring Affect the Manufacturing Industry?
While a number of the factors that initially tempted manufacturing companies to offshore their production still exist, a variety of considerations have led companies to return to American soil. Labor costs, while still typically cheaper, are rising overseas. Some companies found that less expensive labor and more lax regulations also equated to lower-quality products or materials. Also, innovations in automation have drastically improved since the offshoring trend began, meaning that American manufacturers can generate products faster, cheaper, and in higher volumes.
Whatever the reason, by bringing manufacturing facilities back to the U.S., those companies are having a positive impact on the U.S. economy while also benefiting their own bottom line. Reshored companies can lower production costs, simultaneously increase profits, have more control over product innovation, and streamline the logistics of procurement, production, and distribution to make their business more effective on the whole.
Advantages of Reshoring
More specifically, reshoring manufacturing in the U.S. comes with the following benefits:
Improving the quality of a product and increasing control over quality management and intellectual property
Encouraging the development of a skilled workforce while providing domestic jobs
Increasing responsiveness to consumers’ wants and needs with reduced lead times and modified products
Minimizing import tariffs, freight costs, logistics headaches, and compliance concerns associated with international regulations
Gaining an advantage over the competition, primarily by selling to consumers attracted to locally produced or “Made in the USA” products
Reducing the risks associated with the global supply chain for improved control
Ultimately, the primary benefit of reshoring is to improve the country’s economy. Reshoring directly affects the lives of Americans and makes the country more self-reliant. COVID-19 and the resulting supply chain interruptions have only reinforced the importance of domestic production.
Manufacturing in the USA at American Industrial Company
As a Chicago-based American manufacturer, American Industrial Company has proudly offered quality-driven precision manufacturing services in-house at our ISO 9001:2015-certified 25,000-square-foot facility since 1981. We specialize in comprehensive prototyping, design, tooling, metal stamping, laser cutting, and many more value-added services in the U.S for customers both domestic and international. Contact us today to learn more about our turnkey solutions and precision metal stamping capabilities.
A new report has shown that over the past 10 years, manufacturing in the United States has started to become more competitive compared to many low-cost rivals- the most notable one being China. Today, U.S. factories are able to produce goods at cheaper prices than many of those produced in Eastern Europe. According to the Boston Consulting Group (BCG), it is now less than 5% cheaper to produce goods in China compared to the United States, which is quite good considering that the U.S. wasn’t even on the map prior to this. (more…)
One of the biggest conversations surrounding American manufacturing these days is reshoring; companies of all sizes are bringing business and jobs back to American soil. It’s welcome news for the industry.
As some companies still make the decision to outsource—and as many of us focus on the reshoring trend—what many people are not talking about is whyoutsourcing is such a bad decision, not just for the country, but for those individual companies.
Outsourcing is complex and often fraught with problems. The actual process of moving manufacturing overseas, and then making sure it is being done correctly and efficiently, is even more complicated than it sounds. (more…)
For many years, Made In America became synonymous with higher labor costs and declining quality. Company after company took their business overseas looking to boost profits. Without question, this mass exodus was devastating to the economy, as it stripped once proud towns and cities of jobs, factories, and pride. Thankfully, the trend of outsourcing is starting to reverse itself.
So, what has brought about this shift towards reshoring? As with any economic movement, a number of different variables are driving manufacturing back to American soil, as seen in this article. There are a couple that really standout.
Labor Costs: When reshoring first became a trend, costs of labor were much cheaper in places like China and Mexico than they were here in the U.S. Now, according to this article, those wages have grown 15-20% annually, making the wage discrepancy much shorter. As a result, companies are bringing manufacturing back to the States.
Quality: There is little question that the quality of American-made products outstrips those from most countries. We have an amazing pool of workers with superior training and education on every level of the manufacturing process.
Things are changing so quickly, that even the undisputed champion of low-cost, outsourced retail, Wal-Mart, recently pledged to buy an additional $50 billion in U.S. made goods over the next decade. It is a perfect sign that there is not only an emotional desire to bring manufacturing back to America, but also one built on profit margins.
At American Industrial Company, we have never strayed from our commitment to American made products. Since 1981, we have proven that you can manufacture high quality precision metal stampings in America, with American workers, and still compete on the world stage. From the look of things, more and more American companies are starting to come back around to our way of thinking.
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