Thanks in large part to reshoring efforts, U.S. manufacturing has seen a massive surge in job creation in recent months. This increase is strengthening the sector's rank in the global marketplace, and experts believe the trend will only continue to grow. The impressive uptick in reshoring among American manufacturers is trending upward for good reason – bringing operations back to the States leads to lower costs, waste reduction, access to skilled workers, and better branding among numerous other benefits. Reshoring is also good for the country, as it creates more jobs for Americans, improves the national economy, and encourages growth in the sector.
The Future of Reshoring Looks Promising
"U.S. manufacturing gained 60,000 jobs in 2014."
The Reshoring Initiative recently released its latest annual data report, aptly titled "Reshoring and FDI Boost U.S Manufacturing in 2014." The findings revealed that manufacturing is returning to American soil at increasingly high rates, as 2014 beat out 2013 record levels by a whopping 20 percent. Not only has offshoring come to a grinding halt, but the U.S. gained 60,000 manufacturing jobs in 2014, which is a 400 percent change from 2003
"We publish this data annually to show companies that the trend in manufacturing in the United States is to source domestically," Harry Moser, the initiative's president, said. "With 3 to 4 million manufacturing jobs still offshore, we see huge potential for even more growth and hope this data will motivate more companies to reevaluate their sourcing and siting decisions."
Why Are Manufacturers Staying on Domestic Soil?
Original equipment manufacturers (OEMs) that may be considering reshoring should know the advantages of doing so, and the Reshoring Initiative provided some insight into why many manufacturers have already made the shift toward domestic soil. Government incentives topped the list of reasons companies sought to move away from foreign workers to Americans. Having access to a skilled workforce, strengthening the company's brand, and being physically closer to the target market also ranked highly, as did access to advanced manufacturing technology like 3-D printing and automation.
"Reshoring can lead to higher-quality production."
Many other advantages coincide with reshoring as well. The National Institute of Standards and Technology' Hollings Manufacturing Extension Partnership (MEP) pointed out that, despite the lower cost of labor associated with offshoring, reshoring can actually lower the Total Cost of Ownership (TCO). When the OEM's factories and warehouses are all in one place, or at least in the same country, it brings down costs connected to risks, volatility and inflexibility. This can also lead to more consistent and higher-quality production, as well as help to reduce waste, which is ideal for those implementing lean manufacturing strategies.
Helpful Tools for OEMs Considering Reshoring
The MEP pointed out that when a manufacturer is considering pulling back any offshore assets to the States, the first step should be to determine the current TCO, which encompasses everything to risks and balance sheets to external business factors and overhead. The Reshoring Initiative's TCO Estimator – which is backed by the U.S. Commerce Department and is free to use – can analyze up to 30 different cost and risk factors for each source examined. The calculations also include the current TCO for each source and a five-year TCO forecast.
OEMs may also want to compare the offshore TCO with that of operating in the U.S. To do so, the MEP suggested the Commerce Department's Access Cost Everywhere (ACE) tool, which considers a plethora of variables, including product quality, travel and oversight, trade financing, shipping, labor costs, inventory, political risks, and more. ACE also has numerous case studies, reports, databases and other resources to help OEMs understand the true advantages of reshoring and help them make an informed decision.
With these helpful tools and resources, OEMs can determine the best way to bring their operations stateside and reap the many benefits of doing so.