Reshoring Accelerated: U.S. Manufacturers Choose Domestic Suppliers To Create More Resilient Supply Chains

The coronavirus pandemic shocked the world with chaos and disruption to the global supply chain. As a result, nearly 69% of American manufacturing and industrial companies said in June 2020 that they plan to reshore manufacturing and sourcing to the United States. This is an increase from 54% in February, 2020.1

Traditionally, a global supply chain provides benefits that can make offshoring very attractive—from lower labor wages, to reduced manufacturing costs, to more profitable end products.

But in a post-pandemic world still feeling the impact of supply chain weaknesses with the power to halt the flow of business, the sustainability of offshoring, the process of moving business operations from a company’s home country to a new one, is questionable—at best.

The pandemic, combined with existing global trade tensions, created a world in which the way people and industries operate will forever be changed.

One of the most significant changes across global trade and the domestic supply chain is the shift toward reshoring.

Thomasnet data confirms that companies are seeking out suppliers in North America that will help them grow their supply chain’s resilience.

What’s Driving Reshoring Efforts?

Reshoring is the process of returning domestic product manufacturing and sourcing from a foreign country back to the United States. It gives manufacturers and industrial companies more control over the supply chain and enables them to mitigate the risk of future disruptions.

The COVID-19 pandemic is not the only disruption creating a sense of urgency for manufacturers to establish more localized suppliers.

For example, tariffs or trade restrictions that prevent companies from sourcing raw materials required for manufacturing processes, such as plastic injection molding, were already prompting efforts to optimize their supply chains before the pandemic.

In a recent Gartner survey of industry leaders, 55% said they plan to maximize their supply chain resiliency within 2-3 years. About 33% of those same respondents noted new intentions to move busines out of China and other countries.2

A more stable and resilient supply chain that includes domestic suppliers provides more reliable access to raw materials, real-time visibility to the product development process, and better insight to quickly identify potential threats to the flow of business.

According to March 2020’s Thomas Industrial Survey with 1,073 qualified industrial respondents, COVID-19 supply chain disruptions had resulted in a growing desire for locally sourced materials and services.3

 

Balancing Supplier Consolidation with Supplier Diversification

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“Made In The USA” Impacts Consumer Buying Trends, Drives Reshoring Efforts

Though the concept of reshoring is not new, the pandemic revealed critical weaknesses beyond those of previous global disasters. According to Rosemary Coates, Executive Director of The Reshoring Institute, this is because of the scale and duration of the pandemic.

“[The pandemic] awoke in manufacturers a newfound understanding of supply-chain risk. Cost continues to be a major concern, but companies are now also looking to lessen the chances of supply-chain disruptions caused by events thousands of miles away from their intended markets,” Coates says.

“Companies woke up to the realization that just-in-time stocking strategies, which minimize inventory in the pipeline, can lead to severe shortages of product at crucial times.”4

The Results Are In: Top 3 Consumer Trends That Support Reshoring

The Reshoring Institute recently conducted a survey across the United States to measure the impact “Made In The USA” would have on consumers. For example, nearly 70% of respondents said they would prefer buying American-made products.

Here are three trends reported by the Reshoring Institute’s survey that support consumer trends toward Made In The USA:

  • More than 83% of the same respondents said they would pay up to 20% more for products made domestically
  • Over 46% of respondents believe that products manufactured in America are better quality than those manufactured in other countries
  • Nearly 60% of respondents indicated the country of origin influenced their buying behavior

Download complete survey results: The Reshoring Institute Survey Results

If you are in the process of reshoring or building a domestic supply chain, consider adding Xcentric as an approved partner for rapid manufacturing. Contact one of our account executives to start a conversation.

Xcentric provides rapid manufacturing services including injection molding, rapid prototyping, CNC machining, and 3D printing.

Download Xcentric’s Service Sheets.

 

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