You may have heard about an increase in reshoring efforts, especially in conversations around manufacturing work and economic opportunity. Reshoring has a direct impact on many U.S.-based manufacturers and an indirect impact on many companies in a variety of industries. Today, I’ll be covering what reshoring is, our indirect experience with it, and what benefits reshoring brings.
What is Reshoring?
“Reshoring is the practice of bringing manufacturing and services back to the U.S. from overseas. It’s a fast and efficient way to strengthen the U.S. economy because it helps balance the trade and budget deficits, reduces unemployment by creating good, well-paying manufacturing jobs, and fosters a skilled workforce. Reshoring also benefits manufacturing companies by reducing the total cost of their products, improving balance sheets, and making product innovations more effective.”
I found this definition of reshoring from the Reshoring Initiative. It’s an organization focused on bringing good, well-paying manufacturing jobs back to the United States. As a metal supplier, we’re not directly a part of the conversation around reshoring, but because it affects our customers and their customers, it indirectly affects us.
Our Experience with Offshoring
We saw a lot of business move overseas about 15 years ago. At the time, there were a few areas with extremely low labor rates, and many U.S. manufacturers began outsourcing their metal manufacturing to overseas providers. With those metal manufacturing jobs moved overseas, manufacturers were no longer sourcing their materials from U.S. suppliers, like Mead Metals.
In recent years, we’ve noticed a slow trickle of that offshored business coming back, which is great for us and the U.S. metal manufacturing industry as a whole. As the labor rates of overseas work continue to rise and the relative inconvenience of utilizing ocean freight impacts lead times, offshored manufacturing work becomes more expensive and less convenient.
The Benefits of Reshoring
With offshoring making less economic sense, more businesses are choosing to bring their manufacturing jobs back to the United States, i.e. reshoring. And as you saw in the definition of reshoring, there are many large-scale benefits:
- Balancing trade and budget deficits
- Reducing unemployment
- Fostering a skilled workforce
- Reducing the total cost of products
As added benefits, reshoring also saves on resources (especially when you consider the change from overseas shipping to domestic shipping), shortens timelines, and improves customer service. Overall, reshoring is a very positive thing for the United States metal manufacturing industry as a whole.