A number of studies document a growing trend of U.S. businesses bringing manufacturing operations back to the U.S.— often referred to as onshoring. In 2011, a report by The Boston Consultancy Group revealed that 24 percent of senior manufacturing executives were considering returning production to the U.S. and predicted that changes in China’s wage structure along with increased use of manufacturing technology in the U.S. would eliminate the cost advantage of manufacturing overseas.
While a number of companies, including NCR, Sleek Audio, Coleman Company, Outdoor Greatroom Company and Otis Elevator have moved production back to the U.S., the trend is predicted to grow, especially as retailers promote a “Made in America” strategy that gives preference to U.S. manufactured products.
In the A.T. Kearney 2014 Reshoring Index, the number of companies returning manufacturing operations to the U.S. from overseas was reported to increase from 64 in 2011 to about 300 in 2014. While these numbers are positive, the report goes on to point out that the pace of offshoring—moving manufacturing from the U.S. to other countries—actually outpaces onshoring.
One of the challenges in any discussion of onshoring, reshoring or offshoring is the terminology, points out Jim Tompkins, chief executive officer of MHI member Tompkins International. “It’s important to address the original location of the business when using these terms to be clear about the definition,” he says. Although “reshoring” is often used to describe the return of manufacturing to the U.S., it can also refer to a change in the location of an overseas outsourcing partner. “Because Chinese wages have increased, many companies are moving their production from China to other countries, such as Vietnam, which can be considered reshoring,” he explains. For this reason, it is important to be clear about the definition of the terms, he adds.
By Sheryl Jackson