What Is Reshoring? A New Trend in U.S. Manufacturing

Many U.S. manufacturers are reversing the trend of outsourcing and bringing back their production and jobs from overseas. This is called reshoring, and it has many advantages for the U.S. economy and society, such as lower costs, higher quality, more resilience, less trade friction, and more customer satisfaction.

In this blog post, we will explain what reshoring is, why it is good for America, what obstacles it faces, and how Mead Metals is contributing to this positive change.

What Is Reshoring and How Did It Start?

Reshoring is the reversal of offshoring and outsourcing, two ways of moving production or services to other countries or companies. U.S. manufacturers have used these strategies for decades to cut costs, reach new markets, and benefit from global trade.

However, offshoring and outsourcing also hurt the U.S. economy and society. They caused the loss of many manufacturing jobs, the decline of domestic skills and capabilities, the growth of trade and budget gaps, the reliance on foreign suppliers, and the exposure to various risks such as quality issues, IP theft, currency changes, political unrest, and natural disasters.

These risks became clearer after the 2008 financial crisis and the 2020 COVID-19 pandemic, which showed how fragile and vulnerable global supply chains are. Also, the cost gap between offshore and domestic locations narrowed due to rising wages and environmental rules in many offshore locations.

These factors made U.S. manufacturers rethink their sourcing strategies and decide to bring back some or all of their production to the U.S., shining a light on the reshoring movement.

Why Is Reshoring Good for the U.S.?

Reshoring has many benefits for the U.S. economy and society at large. According to the Reshoring Initiative®, a non-profit organization that promotes reshoring in the U.S., reshoring can help:

• Balance trade and budget deficits: Reshoring can improve the U.S. trade balance and reduce its reliance on foreign borrowing by reducing imports and increasing exports.
• Reduce unemployment: Reshoring can lower unemployment rates and increase incomes for American workers by creating more jobs in manufacturing and related sectors.
• Foster a skilled workforce: By investing in education, training, and apprenticeship programs, reshoring can develop a skilled and competitive workforce that can support innovation and productivity.
• Reduce the total cost of products: Reshoring can lower the price of products for manufacturers and consumers by taking into account all the hidden costs of offshoring and outsourcing, such as transportation, inventory, quality, risk, etc.

Reshoring also has environmental and social benefits. By cutting transportation distances and emissions, reshoring can save on resources and reduce the effects of climate change.

Reshoring is good for the U.S. and its trading partners. By creating a more balanced and sustainable global trade system, reshoring can foster mutual cooperation and development among countries.

What Are the Challenges of Reshoring?

Reshoring is a complex and difficult process that involves many hurdles. Some of the main ones are:

• Finding and training qualified workers: U.S. manufacturers need to invest in education, training, and apprenticeship programs to restore and update the skills and knowledge that were lost when manufacturing jobs moved overseas.
• Upgrading and modernizing equipment and facilities: U.S. manufacturers need to invest in new technologies, processes, and systems that can improve the quality, efficiency, and sustainability of their equipment and facilities.
• Competing with low-cost countries: U.S. manufacturers need to find ways to stand out and add value to their products and services, as some countries still offer lower wages and less regulation for manufacturing.

These hurdles can be overcome with strategic planning and collaboration among government, industry, education, and labor. By doing so, U.S. manufacturers can enjoy the benefits of reshoring and boost the country's economy and society.

Reshoring vs. Nearshoring: What's the Difference?

You may also have heard of the term nearshoring, which is often confused with reshoring. Instead of reshoring back to the US, nearshoring lets you move production to a neighboring region. Think of swapping a factory in Indiana for one across the border in northern Mexico.

The difference between reshoring and nearshoring isn't as simple as picking one over the other. Each strategy has its own advantages and disadvantages, and the best fit depends entirely on your priorities and project requirements.

Let's break down the key factors to consider:

• Cost: Reshoring can save you money in the long run thanks to better tax control, automation, and reduced shipping costs. However, nearshoring may offer cheaper labor upfront.
• Speed: Need your metal parts ASAP? Reshoring delivers the fastest turnaround. Nearshoring still beats overseas options, but with slightly longer wait times.
• Logistics: Reshoring means simpler shipping within your own country. Nearshoring reduces the complexities compared to overseas, but not as much as bringing it all home.
• Innovation: Do you have a cutting-edge idea? Reshoring keeps you close to your domestic teams for faster R&D and collaboration.

The Bottom Line: Budget-conscious projects might find nearshoring's proximity and lower costs appealing. But for overall control, speed, and innovation, reshoring often takes the lead. 

How Is Mead Metals Part of the Reshoring Movement?

We know firsthand how offshoring and outsourcing have hurt the U.S. metal manufacturing industry. About 15 years ago, many U.S. manufacturers outsourced their metal production to overseas providers, especially in China, where labor was very cheap. This meant less business for U.S. metal suppliers and lower quality and reliability for U.S. metal customers.

But things are changing. More U.S. manufacturers are bringing their metal production back to the U.S. This is great news for us and the U.S. metal manufacturing industry. As overseas labor and shipping costs rise, offshored manufacturing becomes more expensive and less convenient.

We are ready to serve U.S. manufacturers who are reshoring their metal production. We offer a wide range of metal products, such as brass, copper, phosphor bronze, beryllium copper, stainless steel, low carbon steel, and specialty metals. So, if you are looking for a reliable and high-quality metal supplier for your reshored manufacturing, contact Mead Metals today!