Evolutionary Solutions: Why Reshore?

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A Google search on the term “reshoring” or “onshoring” produces 214,000 and 65,700 records, respectively. A “nearshoring” search produces 255,000 records. These terms are the opposite of offshoring which is the relocation by a company of a business process from one country to another. Typically, operational processes, such as manufacturing or supporting processes such as accounting or IT, were the business functions taken offshore. The economic logic was to reduce costs. If some people can use some of their skills more cheaply than others, those people have the comparative advantage.

The major idea was that countries should freely trade the items that cost the least for them to produce. And this seemed to work well until the economic environment changed and companies began to assess total cost rather than just product cost. Reshoring is offshoring that has been brought back onshore--back to the United States or, more broadly, North America. The trend is expected to continue with estimates that by 2014 at least 20% of companies who sent manufacturing offshore will be reshoring manufacturing.

For the United States, bringing manufacturing back, and thus jobs, significantly impacts our economic future. So many industry leaders are taking on this initiative for the benefit of our nation. No matter which side of the fence you’re on, there is benefit to considering these factors to ensure you are able to serve the end-customer by managing costs. Read the full column here.Editor's Note: This column originally appeared in the May 2013 issue of SMT Magazine.