Since 2010, more than 4,700 companies have brought back some or all of their manufacturing operations and sourcing to the U.S. Despite COVID-19, reshoring was up in 2020. The projected job total for 2020 is 110,000, which will bring the total to more than 1 million U.S. manufacturing jobs added from offshore since 2010.
Since March 2020, 60 percent of companies that are reshoring have mentioned COVID-19 as the reason for coming here. Some manufacturers saw problems due to shortages. Others saw new opportunities. For example, Gentry Plastics expanded production at its factory in Gastonia, NC, adding 12 jobs due to increased demand for plastics for sanitization, clean rooms and personal protective equipment.
Fig. 1 shows the positive factors that attracted companies to their U.S. site and the negative issues they experienced offshore. Most of the issues are related to distance, such as freight, delivery and inventory. Others are country specific, such as rising wages, intellectual property risk and political instability. Looking forward, we expect “supply chain optimization” to increase as a factor, due to the COVID-19 pandemic. To take advantage of the trend, provide the benefits customer companies seek by reshoring. The 12 factors you might provide are in bold.
Reshoring enables risk mitigation, resiliency, agility, responsiveness and faster time to market. As the reshoring trend accelerates, it will drive more economic growth by creating jobs, reducing unemployment, and balancing trade and budget deficits.
Based in Berwyn, PA, Hardinge Inc. is shifting the manufacture of its milling and turning machinery from its plant in Taiwan to its plant in Elmira, NY. The company cites “supply chain interruption” as a negative factor for producing offshore, and “corporate image” and “impact on the domestic economy” as positive factors that made reshoring attractive.
Hardinge is modernizing and investing resources in new assembly capabilities, as well as state-of-the-art heat-treat equipment. “We are very excited to make this move, as it brings the products closer to the customers we serve and leverages the many years of experience we have in Elmira. It also enables us to bring capabilities back to the US, which we are extremely proud to do,” says Chuck Dougherty, president and co-CEO of Hardinge.
Our biggest challenge is to convince companies to do the math correctly and to use total cost of ownership (TCO) for sourcing decisions. TCO factors in many of the hidden costs companies sourcing overseas often miss—for example, travel cost, import duties and risk to intellectual property. We analyzed 180 real-world cases of TCO calculations, comparing U.S. vs. China sourcing. Based on FOB price, U.S. sources were only competitive 8 percent of the time. However, using the TCO Estimator, the U.S. win rate went to 32 percent. Let’s get annual reshoring up to 250,000 jobs per year and the cumulative total to 2 million by 2025!
See if reshoring makes economic sense for your company. For help, email or call the nonprofit Reshoring Initiative at email@example.com or 847-867-1144.