Understanding Reshoring And Why Its Current Outlook Is Good


The “Reshoring Effort,” in brief, is an initiative to bring previously offshored North American jobs back to the continent. While it’s something that goes on in many industries, it’s of particular concern for distributors, service companies, and manufacturers who form critical links in the supply chain for domestic businesses.

It’s been an issue of interest for some months now, with the matter being reinvigorated by the ongoing effects of the COVID-19 pandemic. Many, including the likes of Stonnington Group advisor Nick Stonnington see the havoc wrought by the Coronavirus and reason that reshoring will be a necessary force to help navigate the current and future climate:

“Because the pandemic has been so monumentally disruptive, many countries, including the U.S., will need to recalibrate the delicate balance between onshoring and offshoring to maintain the autonomy needed to survive future crises while supporting a consumer-driven economy and sustainable resources.”

While reshoring has been around as an idea since well before COVID became an issue, the recent pandemic woes have kicked it into a higher proverbial gear, and it suggests that the endeavor will be key to aid economic recovery and generate more opportunities for domestic businesses. Here’s what you’ll need to make some more sense of the current situation.

Reshoring On The Rise?

COVID has revealed some significant cracks in the global supply chain, and caused a large portion of manufacturers to consider or intensify efforts to reshore parts of their businesses. 

There’s a demand for medical equipment, personal protective equipment, and pharmaceuticals within North America, and some 60% of  the US companies that have expressed intentions to return operations to the country have mentioned the pandemic as part of their reasoning.

Some of these efforts are being further bolstered by action from the US Government, which, under the direction of the Biden administration, is trying to enact reforms that will make manufacturing within the country a more attractive prospect for companies across the board.

Aside from fulfilling an immediate need, reshoring efforts may also be getting some boost because of clear economic benefits that reshoring can bring. For instance, reshoring will help businesses save on transportation costs (in addition to keeping their capital from being tied up for too long while products, devices, and components move around).

And in spite of the dire factors that have prompted reinvigorated interest in reshoring, the fact that it has become such a talked about topic also shows that there’s incredible opportunity on the horizon—like helping the country achieve greater manufacturing independence. 

There are some hurdles to be aware of however, especially where long-term success is concerned. Sustained reshoring efforts may require serious reforms to US policies concerning trade and industry. Then there are the challenges of retaining domestic employees, who may require greater rates of compensation than offshore employees.

Overall, however, reshoring presents a clear pathway for mitigating risks to the domestic supply chain, while simultaneously improving the resiliency and responsiveness of manufacturers. All the while, these efforts should continue to drive economic growth and reduce unemployment through a steady influx of new jobs—provided companies are willing to take proactive steps.

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