The term “reshoring” refers to the process of returning offshore manufacturing operations to a company’s home country rather than outsourcing labor to overseas locales. Many statistics indicate that reshoring trends were already on the rise, even before a trade war and pandemic made the idea more appealing. In 2018, 1,389 companies reshored operations, ultimately returning 145,000 jobs to the U.S., according to data from The Reshoring Initiative.
Reshoring rubber manufacturing—and manufacturing in general—to the United States can improve product quality, reduce financial and business risks, and lower transport costs.
While reshoring offers a plethora of benefits, it’s important that businesses understand the main challenges they will face before proceeding with efforts to reshore. These challenges include:
- Costs associated with reshoring. Increased production costs, higher labor costs, and supply chain restructuring all contribute to the high upfront costs of reshoring.
- Lack of infrastructure and training. The United States suffers from a manufacturing skills gap after decades of offshoring. Factories in many locations may require companies to develop extensive training programs and educational partnerships.
- Foreign contracts. The decision to reshore often results in the termination of contracts with previous outsourced suppliers. It’s critical to seek legal advice before reshoring to avoid lawsuits based on contract disputes.
Top Reasons to Reshore
While any major manufacturing change offers up its own unique set of challenges, reshoring largely provides companies with a long list of benefits.
Often, American consumers prefer to purchase products made in America. These customers appreciate knowing that an organization directly supports their local economy, provides fair wages to its employees, and reduces carbon emissions by manufacturing and shipping its products within the United States. Reshoring manufacturing can greatly improve a company’s brand image.
Ecosystem Synergies and Localization
Reshoring manufacturing drastically improves predictability, shipping speeds, and time to market. Products created in offshore factories can take weeks or months to reach the United States, with the unfortunate effect of more opportunities for error and delays.
By reshoring and thus localizing manufacturing, manufacturers can provide rapid delivery of products to their distribution network. Reshoring can also allow companies to work more closely within their local ecosystem, improving local economies and enacting greater control over the supply chain.
Recent corporate tax cuts and new tariffs have made reshoring more appealing. Companies which reshore manufacturing may also be eligible for other government incentives that may help mitigate some of the upfront costs of reshoring.
Since reshoring manufacturing creates a shorter supply chain, organizations can more accurately forecast, reduce shipping times, eliminate complex overseas transportation, and respond rapidly to consumer demand. Manufacturers that have reshored are better able to control unforeseen circumstances, allowing them to be more flexible.
Lower Cost Gap
With more control over the supply chain and a greater ability to oversee the manufacturing process, reshoring makes it possible to reduce cost gaps. This opportunity enables manufacturers to more accurately make predictions and control their budgets.
With offshore manufacturing, companies may struggle to adequately oversee the production process. The long distance from the offshore facilities demands managers supervise outsourced manufacturing, often requiring them to travel excessively, costing the company both time and money. Reshoring allows management to easily oversee the entire manufacturing process.
Proximity to Customers
Modern customers are accustomed to receiving things quickly. Reshoring manufacturing makes it much simpler to rapidly put products into the hands of the customer, which increases overall satisfaction, earns money more quickly, and enables more accurate forecasting.
Reshoring With Universal Polymer & Rubber
Since 1971, Universal Polymer has been producing sophisticated polymer parts from our facility in Northeast Ohio. We offer reliable, high-quality turnkey services to any organization looking to begin sourcing its rubber parts in the United States. Read about us to learn more about our history and values. For additional pricing information, request your quote today.