Reshoring Manufacturing to the US

Back to the Future: Reshoring Manufacturing in the USA Post-Pandemic

12/18/2023

In light of the supply chain challenges triggered by the pandemic, many in manufacturing are primarily focused on bringing production back to US shores. Factors such as proximity to customers and markets, supply chain sustainability, and the consequential impact on the domestic economy are driving the desire to relocate production back to the U.S.

For the past decade before the pandemic, from 2010-2020, more than 1 million jobs were restored back to the US. Many companies are seen moving away from offshoring because of quality issues that lead to reworking, and trouble with warranties. Another large factor is freight costs cutting into profits. Additionally, the overall cost of offshoring always must include tariffs and taxes, plus the coordination and stress of product delivery. And as we have seen very clearly, when there is a disaster such as a global pandemic, political instability or natural disasters, the supply chain is disrupted causing massive effects on everyone’s day to day.

Bringing manufacturing back to the U.S. brings companies closer to their customers and markets. It also opens up opportunities for governments incentives! There are many skilled workers available here and proximity makes training an easier hurdle.

Some companies may even lean towards reshoring because it adds an authenticity factor to their brand that they are made in U.S.A. Or they may want to let their customer’s know just how close to home their products originate to reach customer’s with concerns about the environmental costs associated with long distance travel. Plus, sometimes just simply being close to your customers, can sway their decision in certain situations.

A significant 70% of companies expressed a likelihood of reshoring their operations in the upcoming years. Over the past three years, 41% of companies have already taken steps to restore a portion of their manufacturing operations to the United States. This inclination is accompanied by a notable shift, with 62% anticipating a reduced emphasis on Just-in-time manufacturing models. Almost half of the surveyed companies, 49%, agree that the advantages associated with onshore production outweigh the potential drawbacks of higher labor costs.

So what is driving these attitudes? Well for starters, a collective of 21 industry organizations, including the American Federation of Labor and Congress of Industrial Organizations, The Alliance for American Manufacturing, the American Iron and Steel Institute, and the American Steelworkers, has urged the U.S. government to support and invest in the domestic production- specifically of personal protective equipment.

Then there is also economic policy. Executive Order 14005 guarantees that taxpayer dollars invested by the federal government prioritize products "Made in America." This initiative establishes a significant role for the Manufacturing Extension Partnership (MEP) in actively conducting supplier scouting. The goal is to identify domestic suppliers with the capability to manufacture goods, products, and materials in the United States, aligning with federal procurement needs. While Executive Order 14017 focuses is on evaluating and fortifying the resilience of supply chains. This involves a comprehensive review of supply chain risk, exploring reshoring options, and establishing robust domestic and alternative supply chains.

Another factor is labor policy- the National Apprenticeship Act holds the potential to generate close to one million fresh apprenticeship opportunities. This will increase the skilled work force that is available in the coming years.

So all of this sounds promising, but you're worried about the price tag? Well, if you're local to Maryland, there are state funds available to help your company adjust to reshoring! Two good options to pursue are the Partnership for Workforce Quality (PWQ) and More Jobs for Marylanders (MJM) incentive program.

PWQ helps to elevate small and mid-sized manufacturers with matching training grants and support services! This helps boost workforce skills for existing employees- getting them trained on new technologies and production processes to improve productivity and increase employment stability.

While MJM promotes the growth of manufacturing in Maryland by providing tax incentives for manufacturing job creation.

All of these findings underscore a noteworthy trend towards reshoring and a reconsideration of manufacturing strategies among businesses! Reshoring allows for streamlining of the supply chain- keeping the right materials readily available not only cuts down on lead times but also means less excess of stock and raw materials you have to keep on hand.