#115 – Inside Our Industry – Bring It Home

Posted on | Inside Our Industry

Bringing manufacturing production back to the U.S. continues to be a very hot topic, even as we enter the waning days (hopefully) of the coronavirus pandemic. Following is a great piece from statista.com that digs into just how many companies are discussing reshoring.

Bring It Home
by Felix Richter, Aug 16, 2022, statista.com

As the Covid-19 pandemic, the Russian war on Ukraine and the growing tensions between China and the United States have brutally exposed the vulnerabilities of highly globalized supply chains, more and more companies are reconsidering their position, trying to shorten supply chains and to bring production back home or at least closer, wherever possible (and financially feasible).

While buzzwords such as “onshoring”, “reshoring” or “nearshoring” started to pop up in more and more earnings calls at the onset of the pandemic, many experts thought the excitement for bringing production back home would be short-lived, much like the pandemic itself. However, the coronavirus proved to be a lot harder to contain than many had originally hoped. And, with geopolitical tensions mounting and global supply chain disruptions persisting, the onshoring trend is very much alive.

According to Bloomberg transcripts of U.S. companies’ earnings calls and presentations, onshoring buzzwords are being thrown around more often than ever this year, exceeding the level seen in the early days of the pandemic. And it’s not just words, either. According to a UBS survey of C-suite executives, 90 percent of respondents said their company was either in the process or considering moving production out of China, with around 80 percent saying they were considering bringing some production back to the United States.

While higher shipping costs associated with excess demand and surging fuel costs could work in favor of a mass return to domestic production, the strong dollar is pulling in the opposite direction, as it makes labor and other production factors relatively more expensive in the United States.