I founded the Reshoring Initiative in 2010 after witnessing an acceleration of U.S. manufacturing offshoring. As EPI News reported in January 2011, "In a year when fewer than one million domestic jobs were created, International Economist Robert Scott calculates that the growth in the U.S. trade deficit in 2010 created 1.4 million jobs overseas in 2010 and that many of those jobs were outsourced by American companies.” Harvard Business School professors Gary Pisano and Willy C. Shih wrote in 2009 that the United States had been ceding the country's industrial commons—“that is, the collective operational capabilities that underpin new product and process development in the U.S. industrial sector." Being the foundation for innovation and competitiveness, they are not only “embedded in firms and scientific institutions, but also geographically rooted.” I agree. Companies began to appreciate the benefits of local manufacturing and the reshoring trend grew steadily from 2010-2019 but developments in the 2020-2023 era shifted reshoring into hyperdrive. Reshoring in the 2010-2019 era From 2010 through 2019, companies decided to reshore mainly due to the irritation of many small costs and delays, including quality issues. We urged companies to more accurately assess their total cost of offshoring and shift their collective thinking from ‘offshoring is cheaper’ to ‘local reduces the total cost of ownership.’ The Reshoring Initiative developed and continues to offer The Total Cost of Ownership (TCO) Estimator®, a free online tool that helps companies account for all relevant factors — overhead, balance sheet, risks, corporate strategy, and other external and internal business considerations — to compare the true cost of sourcing, domestic vs. offshoring. By using this tool for sourcing or selling, most companies will find they or their customers can bring back 20 to 30% of what they are now importing. The new normal Economics expert Rana Foroohar commented in Yahoo! Finance on disruptions, “Supply chain interruptions are now happening every 18 months to three years. So this is not a black swan event. This is something that for a variety of reasons is becoming the new normal.” The pandemic caused 80% of global sectors to incur supply chain disruptions, compelling over 75% to widen the scope of their existing reshoring plans. Shifting into hyperdrive — the 2020-2023 era Developments in the 2020-2023 era led to reshoring operating at warp speed. A recent survey conducted by Xometry, Forbes, and John Zogby Strategies, found that 48% of CEOs reshored all or some of their facilities (2023 Q2), a dramatic jump in three months from 35% (2023 Q1). Over the past four decades, there has been persistent underinvestment in U.S. manufacturing. In stark contrast, manufacturing investment is now surging. New investments in U.S. manufacturing by domestic and foreign companies shifted into hyperdrive after President Biden’s Inflation Reduction Act (IRA), Act, and the Bipartisan Infrastructure Bill were enacted. Reshoring + FDI manufacturing job announcements in 2022 were at the highest rate ever recorded, with a total of 360,000+ jobs, a 53% increase from the 2021 record high. Reshoring + FDI manufacturing job announcements continued to outpace recent records, adding 101,500 jobs in 2023 Q1. If the current rate continues new job announcements will reach over 400,000 by year-end. Additionally, the cumulative number of jobs brought back since the manufacturing low in 2010 will reach two million — about 40% of the five to six million lost to offshoring. Developing a local supplier ecosystem DEMA Engineering Company has reshored 20% of their work from Taiwan and China to the U.S. Jonathan Deutsch, president of DEMA says, “Everything shifted suddenly and almost entirely in 2020. The biggest problem for us, as for so many, was the cost of freight, which had skyrocketed overnight. We went from a 40-foot shipping container costing $3,500 to costing over $28,000.” Deutsch adds that between the sky-high freight costs, port strikes, labor shortages, and unreliable deliveries, “it was no longer workable and was imposing extremely challenging and unpredictable circumstances on our business. Add the price increases worldwide, geo-political challenges, tariffs — the uncertainty became too much. This is what pushed us to start to imagine a change.” DEMA is currently developing a local supply chain network and continuing to reshore more work. “Especially for new projects, we are bringing the tools themselves that make the parts back onshore, and then we can start making the parts here, in Missouri or in Pennsylvania. For the last three big projects we’ve done, we’ve been able to onshore most of the parts,” Deutsch concludes. Are you thinking about reshoring? For help, contact me at 847-867-1144 or email me at email@example.com. Our main mission is to get companies to do the math correctly using our free online Total Cost of Ownership Estimator (TCO). By using TCO, companies can better evaluate sourcing, identify alternatives, and even make a case when selling against offshore competitors.
I founded the Reshoring Initiative in 2010 after witnessing an acceleration of U.S. manufacturing offshoring. As EPI News reported in January 2011, "In a year when fewer than one million domestic jobs were created, International Economist Robert Scott calculates that the growth in the U.S. trade deficit in 2010 created 1.4 million jobs overseas in 2010 and that many of those jobs were outsourced by American companies.”