What Effects Will Reshoring Have?

October 28, 2013

Offshoring caused a lot of problems within the middle-class people of America. Many manufacturing jobs were lost to workers overseas that could be paid a much lower wage and with little to no benefits. This shift has caused many Americans to seek work in other industries, namely the service industry. Unfortunately, the pay is less in many other industries, thus leading to a decrease in economic activity for the United States. However, manufacturing jobs are trickling back in to the United States by way of ‘reshoring.’

Reshoring is offshoring in reverse. Many companies have discovered the cost of doing business in other countries is much more than initial estimates. They have also learned that the quality of their products has greatly diminished, thus tarnishing the name of previously well-respected companies.

Reshoring will have a positive impact on the United States. First, it will bring good-paying, lower skilled jobs back to the country which will put many Americans back to work. Second, the products offered in stores will be of a higher-quality and the words “made in China” will start being the exception rather than the rule.

Reshoring was bound to happen. When middle-class jobs get sent to another country, it has a stimulus effect on that country’s economy. Due to the increased labor, there is an increase in demand. That increase in demand then increases the need for supply and thus more jobs. After some time, the people of the country in question will demand higher wages as they acclimate to a higher standard of living. When that happens, businesses find that it’s no longer cost-effective to do business in that country.

Bringing jobs back to America will be one of the best things that can happen – especially manufacturing jobs. The United States used to be the largest importer of raw materials and the largest exporter of finished products, but after the offshoring craze, that role has nearly reversed. With manufacturing jobs returning to the United States, there will be an increase in economic activity which may just pull us out of the recession we find ourselves in today.

MBR Consulting


Headine from Manufacturing Executive: Caterpillar Reshores Japanese Production Back Home: Part Of A Trend?

December 27, 2011

Caterpillar said, “It was moving the production lines from Japan to reduce logistics costs, improve delivery times, and be able to respond faster to the customers who now use most of these products in the Americas and Europe.”

Welcome news indeed. It seems that the reshoring initiatives are picking up steam. I recently heard of other manufacturers that are bringing their jobs back to the USA. Apparently they all realize that it wasn’t all that good for them. Not too long ago one manufacturer’s rep and I discussed his company’s offshoring by telling me how the labor costs here were too high and the company that he represented had to produce in Asia where the labor costs were lower. This company is a B to C company and sells retail here in the U.S. Now that they have moved back here, their retail prices have actually LOWERED!

If this is indeed a trend, being the optimist that I am, I think that we will start seeing more companies returning to the U.S. I know the logistics of a return are difficult (a building has to be set up for production, machine tools have to be considered, etc.) but they are not insurmountable.

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