After decades of American and European companies outsourcing jobs and repurposing factories around the world — especially in China and India — the pendulum is beginning to swing back: Business leaders are realizing that there is a distinct advantage to local supply chains, and many are choosing to reshore manufacturing and production closer to their end customers.
This week, John Keilman at The Wall Street Journal announced, “America is back in the factory business,” noting that U.S. Census Bureau data shows that manufacturing-related construction spending reached $108 billion in 2022, the highest annual total on record. This is also more than was spent to build schools, health care centers or office buildings. As more and more factories are erected to support the manufacturing explosion, companies are also discovering how to take advantage of investment and tax incentives in the recent CHIPS and Science Act and Inflation Reduction Act.
The CHIPS and Science Act focuses on investing in manufacturing memory chips for computers and electronic devices, semiconductors, and batteries for electric vehicles — all essential for growth in high-tech and all produced by supply chains outside the U.S., which were heavily affected by labor shortages post-pandemic. Historically, 80% of semiconductor fabrication sites have been offshore, mainly in China, Japan, Korea and Taiwan, according to S&P Global.
The European Parliament, in a report on post-COVID value chains, noted that “geopolitical rivalry” between the U.S. and China and “international competitiveness” are reasons enough for companies to consider reshoring production back in Europe. But they also expressed fears over supply dependencies from other countries that might eventually be misused politically.
Yet there are other reasons to engage in reshoring and nearshoring: Most notably, speed, flexibility and resilience. Global management consultancy firm Kearney states: “40% of the companies we work with have either already moved some of their sourcing and manufacturing out of China or plan to do so within the next three years, as part of reshoring, nearshoring or best country-shoring strategies intended to broadly improve resilience and sustainability, and manage tariff, sanctions, or other compliance risks.”
Fulfilling needs
Of course, setting up brand-new factories and manufacturing processes comes with both challenges and questions. To offer guidance and answers, an upcoming webinar from ASCM will address supply chain design lessons from some successful reshoring initiatives and other insights from those that are currently underway. The nonprofit organization Reshoring Initiative compiled a comprehensive database about reshoring, which will be presented during the webinar. The analysis applies to any program that aims to bring manufacturing jobs back to home soil.
And if you’re looking to hire workers for those new manufacturing hubs, register to exhibit at ASCM's Virtual Career Fair. Taking place April 26, the event will expand your reach and connect you with supply chain talent from across the globe. Registration is free to job seekers, and the user-friendly, digital platform enables both employers and candidates to chat directly from the comfort of their home or office. After all, staying close to home is what this reshoring trend is all about.
