Best practices Jul 17, 2016 2 Comments

Re-shoring Gives Economic Hope to Manufacturers

Offshore outsourcing has become one of the hot button political issues of the day. Especially in light of the U.S. economic downturn, there is a desperate need for more jobs for American workers, while at the same time companies are looking for ways to save money to keep themselves afloat. But now it looks as though re-shoring might be an idea that makes sense for both sides, making re-shoring a trend that just might stick.


The OffShore Outsourcing Controversy

Off-shoring in the manufacturing, customer service, and tech industries has been happening for some time now and opponents feel there are far more negatives than positives to offshore outsourcing (delays, hidden costs, quality control), while others see nothing but an effective strategy for keeping costs down.


Offshore Outsourcing’s Hidden Costs

Over the years, the biggest argument for offshoring is that it provides inexpensive labor and saves companies money. But does offshoring do more harm than good? Between demands for higher wages overseas and rising fuel costs (which impacts shipping), offshoring often proves to be economically impractical.

Hidden costs add up for manufacturers, and a lengthy supply chain negatively impacts their bottom line. For example, many overseas companies will not ship the products they make until they receive full payment. However, reshoring can resolve these logistical issues by shortening supply chains and improving cash flow.

Rising costs, especially in China, play a deciding factor in the offshoring versus reshoring debate. According to a study by the Hackett Group, companies are looking at reshoring 20% of their offshore manufacturing between 2012 and 2014.

Offshoring also raises the question of customers’ needs. According to a survey by Accenture (a market research firm) of 287 manufacturing companies, U.S. manufacturers want to bring operations closer to home, in order to provide better service to their customers. A common complaint with offshoring is language and cultural barriers, which complicate communication and delay production.


Can Reshoring Save American Manufacturing?

As the reshoring trend takes hold, with more and more U.S companies beginning to move away from offshoring, some say reshoring could mean “Made in the USA” represents new hope for the manufacturing industry and could play a significant role in America’s economic recovery.

The U.S. Bureau of Labor Statistics reports 11.96 million manufacturing jobs in June 2012 – an increase of more than a half million new jobs as compared to 2010. This is a promising forecast for unemployed workers who seek careers in manufacturing.

Not only is reshoring a smart economical move, but it protects manufacturers by decreasing compliance issues. Since trade secret theft can be a big concern, reshoring reduces intellectual property and regulatory risks. Another concern is the impact of natural disasters. After the earthquake and subsequent tsunami in Japan last year, American-based companies are hesitant to outsource to Asian countries.

Reshoring also trickles down to state and local levels. Many state and local governments provide tax breaks for domestic manufacturers, which provide further incentive for manufacturers to keep it local.

Manufacturers, who are often criticized for outsourcing labor to third world countries with poor working conditions, can now keep a more watchful eye on labor laws in their own backyard. And for those companies who want to take their “good citizenship” role one step further, by decreasing their carbon footprint, keeping operations in the U.S. allows them the additional goodwill of consciously reduced environmental impact.

In the end, as manufacturers continue to face rising production costs and tough competition, the trend towards reshoring just makes smart business sense for U.S. manufacturers.




Packaging incorporatedGuest post by Derek Brink, V.P. of Sales and Marketing at Packaging Incorporated, a 55-year old packaging and collated fastening distributor that specializes in innovative solutions for all industries needing “inside the box” product protection and voidfill, “outside the box” load containment packaging and collated fastening.

Rod Sherkin

Rod is a former senior executive, responsible for Purchasing, for both Pillsbury and Ball Packaging back in the 80’s and 90’s. Since then, he has continued to work in the Purchasing field as both a consultant and founder of the website


  1. A great article – thank you! The time is right to make more Made in USA products available to U.S. consumers.

    The Reshoring Initiative has reviewed and aggregated consumer surveys of various sizes from ten sources conducted between 2010 and 2013, gleaning insight into the preferences of more than 14,000 consumers from the U.S. as well as key trading partners including France, Germany, and China. We have determined that, among American consumers, there is a decisive preference for and an overall positive perception of American-made goods: 97% have a positive view of goods manufactured in the U.S. (AAM, 2012) Americans on the whole also have a positive opinion of companies that manufacture in the U.S. (91%), believe it is important to manufacture in the U.S., and think the government should take steps to support American manufacturing. (AAM, 2012)

    Consumer Preference Surveys: The bleeding of manufacturing jobs to offshore has stopped.

    Reshoring, including FDI, balanced offshoring in 2015 as it did in 2014. In comparison, in 2000-2007 the United States lost net about 200,000 manufacturing jobs per year to offshoring. That is huge progress to celebrate!

    There are still 3 to 4 million manufacturing jobs offshore, a huge potential for U.S. economic growth. MAPI suggests an approx. 3.6 multiplier effect.

    Read the Reshoring Initiative data report: Reshoring and FDI boost U.S. manufacturing in 2015

    The not-for-profit Reshoring Initiative can help.
    The not-for-profit Reshoring Initiative’s free Total Cost of Ownership software helps corporations calculate the real P&L impact of reshoring or offshoring. In many cases, companies find that, although the production cost is lower offshore, the total cost is higher, making it a good economic decision to reshore manufacturing back to the U.S.

    • Adam

      Thanks for reading, Sandy! Keep in touch and look out for more articles on this subject.

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