It feels like we’ve been reporting on the reshoring of American manufacturing for years. It was always just around the corner. Now, Kearney’s 10th annual reshoring report says that it’s actually happening. 96% of CEOs surveyed were evaluating reshoring, had decided to give it a shot, or had actually succeeded in reshoring their operations.
What made the difference?
Kearney’s gives the top reason: consumers have changed their minds. We remember reading that people would buy laundry soap from Satan if he offered the cheapest price, but that is apparently not so true any more. Not only do American consumers prefer to work with environmentally and socially responsible companies, they are also willing to pay more for American-made goods.
This might be surprising in times of inflation, but government incentives for reshoring have helped to balance cost differences. We should also remember that wages have been rising in some of the major offshoring destinations, making U.S. manufacturing more palatable.
The pandemic also affected consumers’ views. We saw the consequences of supply chains that relied on overseas manufacturing, and some of us got a little nervous about foreign goods at the same time.
CEOs who responded to Kearney’s survey reported pressure from a variety of stakeholders. The board of directors was the most often mentioned as a source of exhortations to restore, but respondents also mentioned employees, industry organizations, government agencies, and even social media.
There pressures could be a response to changing consumer attitudes, as well.
Improvements in automation
The cost of automation has continued to fall, while the flexibility of robots has increased. The upfront cost has in some cases been reduced not only by falling prices but also by the option of robots as a service m– renting rather than buying robots. This helps companies that worry about making a large upfront investment in automation that becomes obsolete within a year or two.
63% of respondents in the survey said that their reshoring process involves increasing automation. This is essential in areas where the labor shortage has created challenges. It also means that reshoring may not result in “bringing jobs home,” unless we count jobs for robots.
We’re glad to see that reshoring is becoming a reality. There are certainly still challenges to be overcome.