Reshoring and Manufacturers

Reshoring is the practice of bringing manufacturing jobs and services back to the United States—jobs that had been previously lost to offshoring efforts. In the past 40 years, an estimated three million to five million domestic manufacturing jobs have been lost to offshoring.¹ In the new world we live in since the COVID-19 outbreak started, ever-changing circumstances create endless uncertainty. However, 2020 and the years to come present a unique opportunity to increase stability and profitability through reshoring initiatives.

Perhaps the most compelling argument in 2020 for reshoring efforts is to maintain control over supply chains, which have seen instability like never before due to the COVID-19 pandemic. The Reshoring Institute, a bi-partisan 501(c)3, found in its 2019 survey of global manufacturers, that over 70%² of manufacturers experienced some type of supply chain delay in their overseas operations. While the figures are not currently available relating to the 2020 year, there is likely to have been an even greater impact due to the pandemic. In fact, Thomasnet????®, a register of manufacturers worldwide found in a June 2020 survey that 69% of respondents were “likely” or “extremely likely” to reshore,³ largely in part to create more resilient supply chains.  When supply chains are local to a manufacturer, lead times can be reduced, quality can be improved and relationships with the local supply chain can be grown and fostered.

A lesser known, but equally compelling, argument for reshoring is the preservation of intellectual property (IP) owned by the manufacturer. China continues to be a manufacturing powerhouse, and according the Economic Policy Institute, an estimated 2.8 million⁴ manufacturing jobs were lost to China since China’s admittance to the World Trade Organization in 2001. The manufacturers in China pose a threat to international manufacturers in that IP is at risk of being infringed upon due to lack of protections in China. CNBC found through a survey of Global CFO’s in 2019 that approximately one in five CFO’s reported having their IP stolen by Chinese firms within a year of the survey.⁵ Manufacturers invest substantial capital into the development of IP, and when that is stolen from them and used against them, the results can be catastrophic. Reshoring can prevent the theft of IP because U.S. protections are substantially greater and there is more recourse if IP were to be infringed upon.

While reshoring may not be the solution to all of the challenges presented to manufacturers, it certainly can be an option to help manufacturers weather the uncertain storm. The global pandemic, with all of its pain and struggles, also presents an opportunity to act, and the opportunity to capitalize on openings, and to rise above the challenges. Reshoring gives manufacturers the means to control their destiny and aid in the economic recovery of the United States.