Sometimes referred to as “insourcing,” the recent trend of reshoring has been sweeping across the manufacturing sector ever since the early 2010s. Brought about by a conglomeration of economic need and political pressure, reshoring is a term that is used to describe the act of relocating a company’s manufacturing processes from overseas, where it was recently moved, back into the United States. As such, the reshoring trend has become an extremely popular business strategy in the 21st century.
Rita Gunther McGrath, an associate professor with Columbia Business School, spoke about some of the direct benefits associated with reshoring in the manufacturing industry today. She was quoted, during an interview with the Wall Street Journal, as saying, “Having the capability to manufacture close to where customers are located can also increase customer responsiveness and decrease turnaround times, making the supply chain more predictable.”
Statistics and Figures
Experts with www.reshorenow.org have compiled extensive figures regarding the recent reshoring movement within the United States. According to their reports, manufacturers who reshore their operations to the U.S. typically see a 56 percent advantage to the total cost of ownership, or TCO, as opposed to manufacturers who choose to continue the production operations within China. Moreover, researchers with www.reshorenow.org have estimated that as many as six million jobs, primarily within the manufacturing sector, could be recouped by new reshoring initiatives.
Researchers with www.reshorenow.org have also supplied a list of the most common reasons for reshoring to the United States. According to their reports, most organizations cite wage and currency changes as the primary reason for bringing their operations back to the U.S. Others cite quality, delivery, freight costs, travel costs, inventory and even the loss of intellectual property. With this in mind, the benefits of reshoring your own operations back to the United States start to make themselves known.
The manufacturing team with BMW automobiles is a great example of a company that uses both reshoring and nearshoring, which refers to the practice of creating production facilities near the U.S. One of their latest facilities, established in San Luis Potosi within northern Mexico, is expected to open in 2019 with 1,500 full-time employees.
Apart from nearshoring, BMW has also played a part in the recent reshoring movement. Their pre-existing facility in Spartanburg, S.C., for example, is set to receive an additional $1 billion in investments. The new funds are expected to boost the production capacity of the plant to 450,000 within a period of only two years.
But Is It Catching On?
To put it simply, reshoring absolutely is a real trend within the United States today. While it has yet to be embraced by the majority, brands such as Apple, Google, GE, Whirlpool, Lenovo, Zentech, Digital Innovations and many others have already begun their own reshoring initiatives.
Matt Turpin, CEO and president of Zentech, explained why his company supports reshoring today. He was quoted as saying, “Zentech is experiencing growth in all industry sectors and continues to see opportunities in the area of reshoring. CEOs and CFOs are realizing that total cost of ownership for offshore manufactured goods is rising even faster than per-unit costs for the same items.”
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