#162 – Inside Our Industry – The Top 5 States Benefiting from Reshoring

Following, in part, is a report from Thomas Insights that includes the top states benefiting from reshoring in 2022. For each of the top 5, the number of jobs added as a result of reshoring, along with what industries are moving to that state and why they are moving there. With companies prioritizing supply chain agility, reshoring is becoming a vital tool.

The Top 5 States Benefiting from Reshoring
Sarah Edwards, Thomas Insights, July 25, 2023

Reshoring, the process of bringing manufacturing operations back to the nation where a company is based, has gained significant traction in recent years. Pandemic-related supply chain disruptions revealed some significant vulnerabilities in American manufacturing strategies, defects that policy-makers and business leaders aim to remedy through reshoring.

Ongoing conflicts, such as Russia’s invasion of Ukraine and instability across Asia and Europe, have spurred CEOs to double down on reshoring efforts and bring their operations back stateside.

While these efforts have benefited the U.S. job market as a whole, several states have become reshoring hotspots. Below are the five states benefiting the most from reshoring and why industries are choosing these locations.

1. Kentucky – Last year, Kentucky added approximately 45,900 new manufacturing jobs as a result of reshoring efforts. In total, 44 businesses chose to reshore in the Bluegrass State. Kentucky propelled into the 2022 rankings’ top spot thanks to huge investments from electric vehicle (EV) manufacturing companies. Kentucky has business-friendly tax laws and ranks as the number one place to do business in the nation. Additionally, Kentucky is located in the midst of a major distribution hub, making it easy for manufacturers to ship their goods to downstream links in the supply chain.
2. North Carolina – In 2022, an estimated 106 companies reshored their operations to the Tar Heel state. In total, North Carolina added approximately 43,881 new jobs as a result of nearshoring, falling just behind Kentucky. Like Kentucky, North Carolina benefitted from major EV battery investments. EV battery manufacturers, and other businesses, are likely choosing North Carolina due to its favorable corporate income tax rates and accommodating regulatory requirements.
3. Georgia – In 2022, 51 businesses reshored their operations to Georgia. This resulted in the creation of over 32,000 new jobs in the Peach State. Georgia also rode the EV battery wave into a top three spot on the Reshoring Initiatives annual report. Semiconductor manufacturerslike Micron Technology Inc. and multinational liner shipping company Hapag-Lloyd also join the fold. The state ranked number one in infrastructure, indicating that it has the resources to help businesses relocate efficiently.
4. Ohio – In total, reshoring created 23,904 new jobs for Ohioans. An estimated 76 manufacturers now call the Buckeye State home. Various businesses are making their way back to Ohio, including electrical equipment and components manufacturers and chemical production firms. …It did rank fourth in cost of doing business and sixth in infrastructure, which makes it an appealing destination for reshoring businesses.
5. Alabama – Alabama rounds out the top five, with 53 businesses reshoring their operations there last year. In total, these companies added approximately 17,000 jobs. Automotive manufacturers like Hyundai and Hondaare investing heavily in Alabama-based manufacturing operations. Appliance, electrical component, and chemical manufacturers are also reshoring some of their operations to Alabama. Alabama features a supportive business climate, reasonable corporate tax rates, and it is located in the heart of the southeast.

Honorable Mention: Texas – In 2021, Texas held the top spot in the Reshoring Initiative’s annual list. In 2022, it fell to the 13th spot, as the Lone Star State only gained 10,643 reshoring-related jobs. However, 87 companies relocated to Texas, which has been a perennial hotspot for reshoring. A variety of industries are relocating or have already reshored to Texas. A few examples include Caterpillar, Oracle, and Tesla. As a result of all this growth, Texas now has the ninth-largest economy in the world  (if Texas were a nation). Due to various economic and logistical factors, Texas is a top-rated destination for businesses. It has multiple seaports, hundreds of miles of coastline, and no corporate or personal income tax.

The rate of reshoring has been accelerating at an unprecedented pace over the last few years. The ongoing Russia-Ukraine war, rising tensions with common offshoring partners like China, and many other geopolitical factors will further fuel nearshoring and reshoring efforts.

Organizations that want to prioritize supply chain agility and promote business continuity should explore nearshoring or reshoring opportunities and begin to identify the most favorable destinations for their operations. By doing so, they can form more resilient and nimble supply networks, critical in the current economic and geopolitical climate.

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