Global Implications of Reshoring in America

Can reshoring in the United States save the world?

Published: Wednesday, April 4, 2012 - 11:53

It’s getting to be an almost daily mantra for me to say, “We live in exciting times, and they’re getting more so every day.” Although the term “exciting” is usually associated with joy, it can be a double-edged thing. I’m aware of the benefits of manufacturing durable goods close to home, but have manufacturers seen the light, or is reshoring merely a transitory response to the increasing costs of fuel and labor?

More important, is the world paying attention to the cyclical pattern of manufacturing at home, to offshoring as a response to increasing obstacles to profitable business, then reshoring back home as the foreign business climate sours?

Lately I’ve run across several articles dealing with the reshoring phenomenon, and I get more excited every time I see another indicator pointing to manufacturing jobs returning home. Naturally, I rejoice at the thought of the U.S. economy thriving again, but why should someone in India or the Ukraine or China care? Because the ramifications are global.

During the 1940s the United States emerged as the first true manufacturing titan of the industrial age. By the 1970s, U.S. corporations struggled to maintain profits, and American citizens struggled to put food on the table as they watched jobs go overseas. Taiwan, India, and Japan benefited greatly from the exodus of manufacturing plants from the United States, but their heydays were soon overshadowed by the meteoric rise of China’s manufacturing sector.

The boon of becoming the “cheap labor du jour” is a welcome boost to the families living in countries struggling for any work, but when the tide turns, the cycle of manufacturing musical chairs can bite deeply. Too many countries have experienced the roller coaster of boom and bust. International corporations could do well by looking past short-term profits and recognize the profound benefits they stand to enjoy, if only they would embrace what Henry Ford and Toyota have long recognized:

• Local manufacturing contributes to a safer, quicker, more stable supply of parts and goods.
• A local supply chain supports just-in-time manufacturing.
• A just-in-time operation is a pull system (e.g., product goes through the supply chain because there is a demand for it).
• A well-managed pull system lowers overhead.

Put these ideas together, and you have ample reason to manufacture close to home, but that’s just the beginning.

Where this gets exciting is when you realize that if it makes sense for American companies to reshore, it must make sense for other nations as well. There are tens of millions of waiting customers in every major country in the world. Is it so farfetched to think that consumers worldwide are eager to purchase goods made in their own country? It just makes sense: If corporations bring their outsourced manufacturing home, they will create jobs at home, which will stimulate consumer spending at home.

When I get excited about a concept, sometimes I get a little crazy. I like to follow the idea out to what might be it’s ultimate conclusions and possibilities. In the case of reshoring, it took me awhile to make the jump from thinking locally to thinking globally. It may seem a cerebral oxymoron to use the term “globally local,” but it makes perfect sense if the entire world’s manufacturing sector starts thinking locally.

About The Author

Ryan E. Day

Ryan E. Day is Quality Digest’s project manager and senior editor for solution-based reporting, which brings together those seeking business improvement solutions and solution providers. Day has spent the last decade researching and interviewing top business leaders and continuous improvement experts at companies like Sakor, Ford, Merchandize Liquidators, Olympus, 3D Systems, Hexagon, Intertek, InfinityQS, Johnson Controls, FARO, and Eckel Industries. Most of his reporting is done with the help of his 20 lb tabby cat at his side.