The global pandemic has been incapacitating international supply chains since early 2020 and continues to cause frequent delays from international suppliers. Hostile trade relations between the United States and China had been brewing even before COVID-19 hit, accelerating a reshoring trend. Reshoring involves relocating manufacturing assets to the United States from China; more universally, it can include sourcing alternative suppliers in the United States or North America instead of Asia.
For several years, reshoring efforts have been gaining momentum and manufacturing interests, especially, have surged in the face of the trade war and global pandemic. In fact, a recent study by Thomas found that 69% of American companies said they were very likely to bring manufacturing and sourcing back to North America. This article explores some of the major factors currently influencing reshoring efforts.
Tight industrial real estate capacity
Warehousing, transportation, and other industrial types of real estate can often be utilized as manufacturing spaces. As the booming e-commerce sector has created an overwhelming demand for industrial real estate, especially distribution centers, manufacturers are facing new challenges as they seek to lease new production facilities near key markets. Reshoring manufacturers are thereby left with the choice of building a facility from scratch or waiting until the capacity crunch passes before leasing new space. Either option can take years.
Manufacturing labor shortage
Reshoring presents a prime opportunity for any manufacturer pursuing a Lights Out manufacturing environment. Facilities can be renovated or built with automated production in mind for reshoring businesses; production can continue with little need for input from operators and technicians once the new facility is up and running, largely circumventing the labor shortage in the manufacturing sector.
Reshoring to the United States presents significant opportunities for eco-conscious companies to create more sustainable production. Manufacturers overseas aren’t held to the same environmental regulations as U.S. businesses; they often shirk their ecological responsibilities. Irresponsible and wasteful practices can ultimately harm a company’s global footprint, creating a negative perception of the organization and causing brand damage. Reshoring production and sourcing to the U.S. makes responsible sourcing and production an easier task.