After decades of American companies sending manufacturing overseas, the tide has turned and some businesses are bringing production back to the United States, according to an Oct. 26, 2017, article on Inc.com.
In 2016, manufacturing jobs increased by 30,000 as a result of reshoring, according to the Reshoring Initiative, a nonprofit headquartered in Kildeer, Illinois. “Preliminary data from 2017 indicates similar trajectories, with an all-time high of reshored jobs per month reported in January 2017,” the organization reports.
A few factors are driving the return of production. Domestically, companies cite government incentives, skilled workforce ability and training, proximity to customers and market, image/brand, and time to market as positive reasons to return to the United States, according to a chart on the Reshoring Initiative website. Negative factors driving the return include freight cost, rising wages, quality, supply chain interruption and delivery.
In addition, “there is a recognition of risks that people did not recognize when they first offshored,” says John Gray, associate professor of operations at The Ohio State University’s Fisher College of Business in Columbus, Ohio, in the Inc.com article. Gray and two other researchers studied reasons small to midsize companies chose to bring manufacturing back home. “It’s not just that they offshored something that maybe they shouldn’t have because they did not think about hidden costs. But they also did not think about how it would affect their ability to be responsive, deal with problems and develop new products together.”