October 3, 2013
Why Reshore, Why now?
As the U.S. manufacturing economy continues to rebound from it steep decline, more and more American companies are returning home to produce their goods. This makes it an ideal time for companies that are on the fence to strongly consider the upside of returning to America to manufacture products.
According to a recent survey,
Financially speaking, the benefits of reshoring extend deeper than the immediate gains companies will save by returning to the U.S. Logistically, it makes more sense to be closer to home. When the amount of distance in a supply chain is reduced, the likelihood of expediting goods across the supply chain from the source to the factory to the destination is increased. There is less of a chance for problems to arise that could prevent recalls or damaged products when shipping.
One example of this arises during large storms, when airports and harbors are shut down due to inclement weather conditions. Even with the best manufacturing intelligence, companies cannot easily plan in advance for serious storms. Once a product is on a ship in a port, however, the products still have to make it to land. If this cannot easily be done, products stand a greater chance of arriving late or in some cases, spoiling.
Additional benefits associated with allaying the amount of travel between points on a supply chain include cost reduction and environmental gains. Companies will have to pay less for airfare or boat shipments. Likewise, there will be less carbon emitted annually so organizations can leverage going green as a competitive advantage.
37 percent of large American employers are currently contemplating moving production operations from China to the U.S. This has largely contributed to rising manufacturing costs overseas, as annual wages in China have increased over 15 percent each year. In the U.S., however, some industries have experienced a 20 percent decline in labor costs.