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Will U.S. Companies Increase Onshoring?

Will U.S. Companies Increase Onshoring?

“Made in China” is something that has defined U.S. consumerism for decades. That’s because many products sold in the US have been made in China for years. Add in the manufacturing that has been moved to Mexico, The Philippines, and Taiwan since the 1980s and you have a large bulk of products commonly used by Americans being manufactured outside of the US. 

While this has been a trend for decades, recent events, changes in laws and regulations and shifting consumer habits have led to a large resurgence in onshoring. 

What is Onshoring?

Onshoring (also known as reshoring) is the practice of businesses moving their manufacturing back into the United States from abroad. This is accomplished by moving facilities and assets back onto US soil, hiring US workers, and cancelling existing contracts with overseas manufacturers. Those companies who do not handle their own manufacturing instead outsource to US-based companies. Reshoring is the same concept; however, it implies that a company once held its manufacturing assets within the United States before moving them overseas. 

Why are Companies Onshoring/Reshoring? 

The resurgence of onshoring and reshoring practices have escalated over the past few years due to several reasons: 

  • Government incentives: businesses are being incentivized by the federal government to return manufacturing jobs to the United States. These incentives have made it more economical for businesses to maintain manufacturing facilities or relationships with manufacturing facilities at home. 
  • Technology: a wave of technological advancements has made it easier and more affordable for businesses to maintain manufacturing assets in the US. Updated technologies range from 3D printers, which have made it more affordable to self-manufacture lightweight products, to automation technologies and robotics, which have drastically increased the efficiency, safety and speed of manufacturing lines. 
  • Customization: shifting consumer demands have resulted in a greater need for customized products. In order to become more responsive to custom orders, manufacturers have found it easier to use facilities closer to home for smaller runs. This has also reduced their shipping costs and lead times for custom jobs. 

The increase in manufacturing in the US is also the result of the energy industry embracing natural gas, which is primarily mined through fracking on US soil. Natural gas has been the largest source of electrical energy since 2015, and the US has an abundant supply of the resource. 

The Benefits of Onshoring

Manufacturers have found there to be significant benefits to onshoring or reshoring their manufacturing assets. Depending on the business and products, these benefits can range from: 

  • Cost savings: labor costs have been rising worldwide, particularly in Asia. This, combined with government incentives and lower shipping price can lead to savings for many businesses. 
  • More efficient supply chain management: when manufacturing and warehousing are kept local, businesses find it easier to manage their supply chain efficiently. Onshoring also brings manufacturing into the same (or closer) time zones and eliminates potential language barriers. 
  • Quality control: when manufacturing is kept local, it is far easier to maintain the quality of products and fine tune the manufacturing process. 
  • Stability: local manufacturing keeps businesses out of international trade deals and local politics in countries and regions all over the world. 
  • Skillsets: US-based manufacturers offer better automation and manufacturing professionals with higher skillsets. 

Thinking of bringing your manufacturing practices to the US? The decision could benefit your business if you outfit your facilities with the right automation products. Contact AMMC for all your automation needs today.