For decades, Americans worried about our manufacturing sector. People believed U.S.-made goods were too expensive or poorly made. They believed U.S. manufacturing jobs were “dirty, dull and dangerous” and that the industry could not provide long-term careers. They believed U.S. manufacturers weren’t paying their fair share of taxes, and they believed our factories were a major source of global pollution.
Today, thankfully, these myths are being dispelled. Thanks in part to a growing wave of reshoring, U.S. manufacturers are able to offer lucrative careers, reduce pollution, increase economic stability, and deliver quality products with greater flexibility and control over their brands, prices and customer data.
We have gone from globalization at any cost to our economy to long-term company and environmental sustainability. We recognize that via localization—i.e., reshoring—manufacturers can compete and provide jobs while improving profitability. We can meet consumer expectations and reconcile their concerns. We can deliver quality products while eliminating the hidden costs and risks of offshore manufacturing.
Studies show that U.S. consumers prefer U.S. products that claim lower environmental impact. Companies and consumers have growing concerns about the ethics, sustainability and origins of their products. According to a Nielsen study, 48 percent of U.S. buyers would probably or definitely change their buying habits in an effort to reduce their environmental impact. Localization reduces the worldwide environmental impact of commerce because U.S. electricity generation is cleaner, U.S. factories are less polluting, and transport of goods is much shorter.
For decades, we have shed manufacturing jobs and the ecosystem that goes along with them. But manufacturing remains the cornerstone of our economy. Manufacturing still has a large footprint, contributing $2.38 trillion to our economy with 12.82 million manufacturing workers earning an average of $84,832 annually. Manufacturing leads to a larger middle class with a higher standard of living and reduces the economy’s vulnerability to economic shocks while promoting innovation. Manufacturing is also critical to national defense.
Quality is the most frequently cited reason for reshoring. According to the Reshoring Initiative’s 2018 Data Report, quality cost ranked No. 1 as the most frequently mentioned negative factor experienced offshore from 2010 through 2018. Service problems such as long delivery times, supply chain interruptions, and loss of control are emblematic of offshoring. Another quantified measure of quality is the frequency of recalls. In 2015, China’s share of product recall cases was 51 percent in the U.S. and 62 percent in the EU. Sourcing or producing locally helps reduce product quality risks and increase flexibility and responsiveness.
To encourage reshoring, the U.S. has made a good start by cutting tax rates and regulations, allowing immediate write-off of capital investments, and strengthening the skilled workforce. Even so, the trade deficit continues to grow, and companies have not taken advantage of the new alignment with consumers.
What can your company do? First, recognize consumer concerns. Communicate the benefits of your made in USA products. Second, produce more here. The Reshoring Initiative offers tools to help you and your customers reshore. These include:
The TCO Estimator for sourcing and selling against imports. This spreadsheet helps quantify 29 costs and risks, including many consumer considerations. We helped one company win a $60 million order vs. a Chinese competitor.
Our Import Substitution Program identifies major importers of what you produce. Use the TCO Estimator to convince them to reshore and source from you.