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Reshoring trend brings opportunity for businesses

November 21, 2016

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Reshoring trend brings opportunity for businesses

By Barry Matherly

As U.S. firms continue to reshore, new supply chain opportunities are arising for both shippers and providers. To capitalize on these opportunities, manufacturers and their logistics service providers should understand the reshoring trend and the resources that are available to assist them with both the reshoring decision and the process of returning jobs.

Since 2010, U.S. firms that previously manufactured goods overseas have been returning production statewide. Many factors fuel the reshoring trend: rising labor rates abroad, lengthy and costly supply chains, quality control, and intellectual property protection.

While 3 to 4 million manufacturing jobs remain offshore, companies have already reshored tens of thousands of jobs. Furthermore, although the U.S. economy slowed in 2015, the reshoring trend maintains its positive momentum, as Forbes recently reported. Additionally, the Boston Consulting Group's 2015 annual survey of U.S. manufacturing executives finds that 31 percent of respondents would put new capacity to serve the U.S. market in the United States versus 20 percent who would choose China — a reversal of the 2013 survey, which showed China favored 30 to 26 percent.

With the trend’s well documented scale and momentum, manufacturers and their service providers need to understand its implications and leverage available resources to assist in both the reshoring decision and process. This will enable logistics firms to not only effectively service reshored companies, but also to actively encourage the reshoring of U.S. firms still operating overseas.


Among the free tools available to promote reshoring and benefit supply chains are:

The ACE tool provides manufacturers with an analytic framework, as well as links to public and private resources and case studies to factor into the reshoring decision-making process. Total cost assessments help uncover overlooked offshoring expenses, such as trade financing, shipping, inventory, and product quality.

This tool provides access to data regarding regional business and industry clusters. Companies can use it to analyze data down to the county level or to identify concentrations of industries located throughout the United States.

The Reshoring Initiative offers this tool to "help companies account for all relevant factors — overhead, balance sheet, risks, corporate strategy, and other external and internal business considerations — to determine the true cost of ownership." The tool provides customized calculations based on unique company data, allows for direct cost comparisons, and includes a forecast for strategic planning purposes.


 State, regional, and local economic development organizations (EDOs) offer many resources for companies that want to return to the United States. For example, economic developers can help select sites, recruit skilled workers, find suppliers, secure permits, develop infrastructure, and arrange financial incentives such as tax credits and grants. EDOs can also be valuable partners for logistics firms, especially in identifying and supporting companies returning operations to the community.

With these tools and the help of economic developers, manufacturers and the logistics firms servicing them will be well positioned to expand their businesses, improve supply chains, and reap the full benefits of the reshoring trend.

 

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