Reshoring: Manufacturing Comes Home to America

This series has been about how American manufacturers are becoming more competitive in the global marketplace. This trend has led to what some people call the “Reshoring of America.” Reshoring is the opposite of offshoring and refers to American companies returning outsourced manufacturing from overseas locations back to the US.

Previously we covered how the reality of rising costs for labor, transportation, fuel, and electricity – along with such hidden costs as miscommunication, long lead times, die failure, legal liabilities, and payment for products sight unseen have all combined to make offshore manufacturing less attractive. Looking forward, CFI believes American manufacturing will become more competitive, not less.

Third world labor rates will continue to rise as younger, higher educated workers enter the market. These next generation workers are not satisfied with a low wage culture that makes the “good life” unattainable. These workers demand higher wages to pay for the consumer goods manufactured in their country. With wage increase pressures and the other, often hidden price factors, involved in offshoring, the cost gap between countries like China and the US making CFI one of your most competitive sources of die cast products.

Where do we go from here?

A study by the Boston Consulting Group indicated that US manufacturers have improved their competitiveness compared with manufacturing companies around the globe. The study covered the 25 largest industrial countries. Studies by industry analysts have shown that of the more than 500 American firms that have reshored, about 60% of the work was reshored from China. The two leading factors motivating U.S. companies to reshore manufacturing from China to the US are the rise in Chinese wages and issues related to quality. High turnover rates in China have contributed to the quality issues.