In recent years, the idea of reshoring –– or bringing manufacturing processes back to a company’s home country –– has gained traction among business owners and industry specialists. There are many reasons for this uptick in interest, including rising labor costs in countries like China and the increasing availability of advanced manufacturing technologies locally.
The White House, for one, has elevated efforts to strengthen critical supply chain disruptions in 2022 after being largely dependent on output ceded to other countries. The Biden administration launched a 100-day review of four products — large capacity batteries, semiconductor manufacturing and advanced packaging, pharmaceuticals and active pharma ingredients, and critical minerals and materials — in a bid to promote national security, economic stability, and high-paying jobs on U.S. soil.
In this guide, we take a closer look at the benefits of reshoring manufacturing jobs and operations. By understanding the pros and cons, you can make an informed decision about whether it’s right for your business.
What is Reshoring in Manufacturing?
Reshoring is the process of moving manufacturing processes back to a company’s home country. This can include bringing assembly and production lines back onshore, as well as relocating research and development (R&D) facilities.
The decision to reshore or not usually comes down to a cost-benefit analysis. Business owners weigh the pros and cons of manufacturing in different countries and make a decision based on the specific needs of their company.
Reasons for Reshoring in 2022
There are several reasons why businesses might choose to reshore their manufacturing operations.
1. Rising labor costs in foreign countries
One of the primary reasons for reshoring is rising labor costs in countries like China and Mexico. As these countries become more developed, the cost of labor rises. In addition, there are concerns about intellectual property theft and quality control when manufacturing products outside of the U.S.
2. Greater availability of manufacturing technology locally
As technology advances, more and more sophisticated manufacturing processes can be done onshore. This eliminates the need to send jobs or operations overseas.
3. Greater desire to be closer to customers and suppliers
Another reason for reshoring is the desire to be closer to and to be in the same timezone as suppliers and clients. This can help reduce shipping times and lead to better quality control.
4. Need for better control over supply chain disruptions
By having critical processes and components manufactured in the United States, companies can prevent or shorten downtime and better protect themselves against supply chain disruptions.
5. The urge to be more sustainable
More and more businesses are choosing to reshore their operations in order to be more sustainable. This includes reducing greenhouse gas emissions and minimizing the environmental impact of manufacturing processes.
Effects of Reshoring Manufacturing on the Job Market
When a company reshores its manufacturing operations, it creates new jobs in the U.S. These jobs can range from assembly line workers to engineers and managers.
In a report by the Reshoring Initiative, reshoring announcements in 2020 created around 138,000 new jobs in the U.S. in 2021, with the highest number of positions logged under transportation equipment, chemicals, computer and electronic products, medical equipment and supplies, and electrical equipment, appliances and components. This number is expected to be higher in 2022 with the Biden administration’s reshoring push.
In addition, reshoring manufacturing can have a positive effect on the overall job market. By creating new jobs and bringing back operations, businesses are helping to reduce unemployment and stimulate the economy.
TruPath Can Connect You With The Best Manufacturing Talent
TruPath is a recruitment firm that specializes in connecting companies with the talent they need for seamless operations. We have a nationwide network of experienced professionals in engineering, manufacturing, and related fields.
If you’re considering reshoring your manufacturing operations, please contact us to learn more about our services. We can help you find the right people for the job and make the transition as smooth as possible.