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One of the fastest growing buzzwords in the manufacturing industry is reshoring; a close second is onshoring. Recently we filmed a video discussing our approach to these topics and we wanted to share key points from a great article we recently read on this topic. Trendspotting is something you have to master to be successful in business. In tough times like we’re in today, it can be the difference between your business surviving or becoming a statistic.
Reshoring is the process of a company bringing their production back within their native country. For example if a company that changed their production practices to outsourcing their labor overseas, and then bringing all of that labor back within the United States. Onshoring is the process of setting up your operations for the first time to focus all of your production within your own national borders.
Onshoring and reshoring production can apply to services, not just physical goods. In this case, the onshoring process is generally much easier, as the transition of large production plants is not necessary.
Let’s look at some of the advantages of onshoring or reshoring.
“Cost-saving – The days of cheap overseas labor and resources are coming to an end. Asia used to provide plentiful, affordable labor, but as countries like China and India continue to rapidly develop, the cost of wages and materials increases. Onshoring and reshoring can also stimulate national economies, so some countries may offer financial incentives for companies to keep their operations onshore.
Simplified supply chains – Rather than shipping goods across the globe, everything can be done and managed in one place using domestic partners, making the supply chain shorter and easier to manage.
Additional benefits – Production standards and regulations vary across the world. By maintaining domestic manufacturing operations, it is easier for businesses to meet quality demands, material standards, and to retain intellectual rights to things such as product design. Also a lean toward protectionism in the U.S. and Europe means that companies increasingly prefer to trade inside their borders or with their closest neighbors.”
Some of the best kinds of companies to pursue reshoring are companies that use specialist manufacturing processes such as CNC machining and plastic injection molding. Also anyone who uses alot of steel and aluminum production.
If you are trying to determine if reshoring or onshoring would be a good idea for your business, here are some questions you should ask yourself first.
- Are there local or national financial incentives in the specific industry?
- Is there a good choice of third-party production sites to handle the manufacture of specific goods?
- Are materials readily available locally?
- Are there enough skilled people to work in production sites or factories?
- Are there opportunities to optimize the supply chain?
- Will onshoring reduce or increase costs over the long term?
- How Will COVID-19 Impact Onshoring?
https://www.thomasnet.com/insights/manufacturer-response-to-covid-19-disruptions-increased-interest-in-automation-reshoring/
In May, Thomas conducted a survey that indicated 64% of manufacturers say that they’re likely to bring manufacturing production back to North America.
With a response to the COVID-19 crisis in America, both political parties are signalling that they may strongly favor companies that bring their jobs and production back, or build their factories in the USA. Reshoring and onshoring are certainly not going to go away in the coming months, and in the next few years it may already be the standard you don’t want to have missed out on.
At Allis Roller, we promise to be quick to respond with a wholehearted commitment to quality parts. You will have our undivided attention, and we won’t let you down. We love what we do, so you can expect to be well taken care of at Allis Roller.