Nearshoring vs. Reshoring - What's the Difference?

Back in July, I covered an interesting topic that’s been growing in popularity: reshoring. And although popular, it’s not the only effort manufacturers are making when it comes to the geographic location of their processes. This other option, which I’ll explain in more detail below, is referred to as nearshoring. But first, let’s review reshoring.

What is Reshoring?

Now, my previous blog answers the question what is reshoring in great detail, but just know that it is an effort by businesses to bring their offshored manufacturing and services back to their home country. With a United States company, an example would be moving the manufacturing of a component from India to the United States. Reshoring has many benefits, which include reducing the total cost of products and fostering a skilled workforce.

What is Nearshoring?

Nearshoring still involves businesses moving their manufacturing and services, but things look a little bit different. If we start with the same example from above of a U.S. company who has some components manufactured in India, nearshoring would be if they moved that manufacturing to Mexico. Mexico is still another country, but it is much closer to the U.S., and the two countries even share a continent.

Nearshoring, at its core, is about bringing manufacturing closer to its point of use. There’s still some distance, but not nearly as much.

Nearshoring vs. Reshoring

When it comes to comparing nearshoring and reshoring, it’s always going to come back to whatever factors a business places the highest priority on. When it’s compared to offshoring, nearshoring lowers travel costs, allows for faster turnaround times, and reduces issues associated with overcoming cultural barriers. But, when you’re comparing nearshoring vs. reshoring, those same benefits go to reshoring.  

As a material vendor who supplies metal to many manufacturers, offshoring, nearshoring, and reshoring are concepts that more directly impact our customers and the customers of our customers. And because of that, it’s important for us to be aware of how these concepts and strategies are impacting the manufacturers we partner with.