Reshoring: A Term You Need to Know

Reshoring A Term You Need to KnowIn a recent post titled “The Beauty of American Manufacturing,” we gave you four good reasons that American manufacturing is something worth talking about (and being involved in). Today, we’re going to expand on some of those ideas by telling you about a term you absolutely need to know: reshoring.

What is reshoring?

We’ve all heard of offshoring. Offshoring is a form of outsourcing–when companies send their production and manufacturing to other countries with cheaper labor and material costs. This could be manufacturing, or skilled jobs, or anything else that’s cheaper abroad, but the point is that companies were saving money by sending labor off of their own shores.

Reshoring is, in essence, the complete opposite. The Reshoring Initiative, a large advocate for reshoring, states their mission, which is essentially the definition of the word, as the following:

The mission of the Reshoring Initiative is to bring good, well-paying manufacturing jobs back to the United States by assisting companies to more accurately assess their total cost of offshoring, and shift collective thinking from offshoring is cheaper to local reduces the total cost of ownership.

So, if offshoring is sending jobs abroad to save money, reshoring is taking those jobs back and again starting to employ American workers with good wages. Companies from Apple to Toyota are staring to reshore, and are starting to realize that offshoring isn’t always the best solution anymore.

Why does reshoring matter?

Even as recently as a decade ago, offshoring was a legitimate way for companies to save money. Energy costs were low, the cost of labor overseas was low, and the wait time associated with ordering and manufacturing products overseas was seen as the standard.

But today, that’s just not the case. American companies see now that more consumers are buying American, and realize the quality and cost-savings associated with manufacturing on our own shores, and are starting to change accordingly. Even according to a special Economist report earlier this year, “after decades of sending work across the world, companies are rethinking their offshoring strategies”

Global labor is getting more expensive, and products spend many weeks in transport before they’re received by companies in America. The fact is, it’s not always as viable to go offshore as it once used to be. From GE investing $1 billion through 2014 to revitalize its U.S. appliances business to Apple’s new Made In the U.S.A. computer, companies are really starting to get actively involved in reshoring efforts.

A term to remember

In thinking about American manufacturing, it’s absolutely essential to understand and remember what reshoring is. If it continues like it’s been operating the past few years, we’ll continue to see a revitalization of American manufacturing jobs, which is good news for American companies and the economy.

If you have any questions, feel free to connect with us in the comments!

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