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.