Reshoring is starting to look a lot better these days.
With the COVID-19 pandemic disrupting international supply chains and stifling domestic production, many manufacturers are now rethinking their international operations.
In addition, through changes across global landscapes and economies, offshoring is no longer the obvious choice for manufacturing that it used to be. Many companies only paid attention to up front costs associated with starting overseas operations, such as labor and quoted manufacturing. In reality, there are many hidden costs that can make the total cost of offshoring much more expensive in the long run.
Some very influential companies have moved components of their manufacturing back to America within recent years: Apple, GE, and Google are just a few of many.
Here are 6 reasons to consider using American manufacturers:
1. Reduced Impact by World Events
As the COVID-19 pandemic demonstrated, international trade can be drastically reduced quickly and stay that way during times of crisis. Many American manufacturers saw overseas elements of their supply chains interrupted, making it difficult to maintain business as usual.
Regardless of what is going on in other parts of the world, manufacturing on home soil alleviates the impact of events in other countries, such as economic collapses, resource shortages, or even wars.
2. IP Protection
Not every country has laws as strict as America's, especially when it comes to intellectual property. If your brilliant design/process/product gets spread around, there's not much you can do about it.
While you can take steps to protect your intellectual property and reduce piracy by filing for patents, whether the country where the theft occurred will uphold those patents is another matter. Furthermore, companies spend years -- and plenty in legal fees -- fighting for what’s rightfully theirs in foreign courts.
The U.S. has strict laws in place regarding intellectual copyright, trademarks, and patents. It's simply easier to work within the country than to fight for your rights as an outsider on foreign soil.
3. Time Zone Differences
Communicating with a manufacturer in China, Taiwan, or even the UK can be frustrating because of the time zone differences. Getting a hold of an administrator at a reasonable hour may be next to impossible, especially when you're busy running your business.
Reshoring means everyone is practically on the same schedule -- even when you’re in New York and they’re in California. You can count on holding meetings and getting information at reasonable times. What’s more, you'll receive news of problems faster, and you'll be able to react to industry/market changes more immediately.
4. Government Incentives
Did you know local, state, and federal governments offer reshoring initiatives to keep manufacturing on American soil? There are grants available through various state and fed local tax incentives, and many locations offer pre-employment training for workers at little to no cost to the manufacturer. The United States’ government is implementing new incentives every year to make reshoring a more attractive option.
5. Reaction Time to Customer Needs
When you're making products overseas, lead times can take months longer than they should. You add time spent in customs at both ends, at least 5 weeks of overseas transportation time, plus the usual in-country shipping and handling time.
When it takes a good fraction of the year just to deliver the product to the right country, you're cutting yourself off at the knees. Demand fluctuates frequently, and you can't take advantage of market peaks when the product is so far from home.
As customer needs shift, you need to be able to react quickly. Using an offshore manufacturer simply does not allow for reasonable customer service.
6. Made in America
Customers and corporations alike are showing their support for reshoring. Market researchers are finding that Americans are placing a higher priority on purchasing domestically produced goods than those produced overseas.
Due to the large number of companies that offshore their manufacturing, the majority of common American goods are actually made in China, Japan, Taiwan, etc. Bringing manufacturing back to the United States creates pride for American products, and pride for our corporations who are providing additional jobs for the American people.
Whatever you choose to do for your manufacturing, American production is no longer a distant runner up compared to the cost of offshoring.