For decades, the manufacturing model churned along without a second thought — design, send file 7,000 miles away, and then wait as the finished products returned on a slow ship across the Pacific.
64 percent of companies are likely to bring manufacturing and sourcing back to North America
Now, that model is not only being questioned, it is being turned on its head. Robotics, automation, software breakthroughs and customer service advantages have kicked off a re-shoring resurgence, bringing manufacturing back home.
According to a Thomas survey conducted in April 2020, 64 percent of companies are likely to bring manufacturing and sourcing back to North America. And this is after re-shoring has already registered historically high levels over the last two years.
Clearly, the tide is turning. And many U.S.-based entrepreneurs will benefit from this new wave of capable and competitive U.S. manufacturing.
The result? Unexpected cost savings, more adaptability to market fluctuations and the ability to iterate and prototype at light speed.
The reality is that many U.S. companies will find a completely unrecognizable U.S. manufacturing environment when they return. Gone are the days of the hand-tooled production lines and old-school customer service. In their place are sleek, sophisticated, tech-driven pioneers. Laser cutting outfits that can churn out high-quality metal parts at a moment’s notice. Quick-turn manufacturers that respond in real-time. New robotics and software systems that make ordering, fulfillment and customer service seamless and painless.
2020 has been a disastrous year for long, overly complex supply chains. Trade war tensions with China mushroomed into new tariffs that threw logistics networks into chaos and uncertainty. And then the COVID-19 pandemic hit.
Supply chains broke down as first large swaths of China shuttered and then the virus spread across the rest of the world, taxing production and sourcing, especially for companies that relied on intricate webs of multinational manufacturing processes.
The disruption was almost universal. Fortune Magazine reported that 94 percent of Fortune 1000 companies experienced supply chain problems.
Meanwhile, nimble manufacturers were springing into action to meet the pressing needs of medical workers and others. A 3D printer in Italy produced respirator valves to supply a hospital in the northern part of the country hardest hit by the virus. The small 3D printing startup reverse engineered, tested and produced the valves in days to meet the urgent need. At SendCutSend, we even helped Michael Gillette of Nevada Jumpstarter, when he developed battery packs for respirators at Renown Medical Center in Reno, Nev. All of the metal battery cage parts were quickly laser cut and delivered from our shop pro-bono, while Gillette volunteered his own time to design, test and assemble the vital battery packs.
In 2020, 94 percent of Fortune 1000 companies experienced supply chain problems.
But let’s put the pandemic aside. What U.S. manufacturing has done in the last several years is prove a point. We can compete on price. And we can over-deliver on innovation, quality and customer service.
Offshoring required a certain calculus to pencil out. Low labor costs had to more than make up for shipping prices. Tariffs had to stay low. The variability in quality and customer service was overlooked because of big volume discounts.
2018, re-shoring set a historic record, up 38 percent from 2017. Re-shoring from China accounts for 59 percent of the total returned manufacturing, and re-shoring has driven 31 percent of the total increase in manufacturing jobs since 2010.Industrial Machinery Digest
That math has changed. Rising wages in China, India and Southeast Asia have increased offshoring costs even as automation and robotics have reduced the price tag of U.S.-based manufacturing. Like crisscrossing graph lines, these two trends have intersected for many U.S. companies, making re-shoring a calculated business decision.
The re-shoring momentum has been accelerating for years. In 2018, re-shoring set a historic record, up 38 percent from 2017, according to Industrial Machinery Digest. Re-shoring from China accounts for 59 percent of the total returned manufacturing, and re-shoring has driven 31 percent of the total increase in manufacturing jobs since 2010.
But the benefits go beyond simple math. The advantages of having manufacturing close to home is reshaping how companies interact with their customers. More customization, more adaptability, real-time responsiveness to market demands — these benefits of having a laser-cutting service or manufacturing partner close to home are driving home the value of re-shoring for companies that for so long assumed production had to be conducted thousands of miles away.
We, for one, are glad to have you back home.