Posted In: Insights

Reassurance on Reshoring

Ringing in a new year brings many different things, among them resolutions and rumors. Bringing pen to paper on everyone’s newest chapter of their self-titled novel promotes everyone getting off on the right foot. With that comes the speculation of what lies ahead? What trends will 2015 bring…? How will it affect my business…? Where do I fit in to the big picture…?

Moving into 2015 I may not be able to help you drop that holiday weight but I can help you with a little insight on what is to come moving into this year. Reshoring… a buzz word and a topic that has long been discussed at the water cooler has now been brought to center stage. Reshoring (for those interested) is defined as the practice of bringing outsourced personnel and services back to the location from which they were originally offshored. I believe that 2015 will be the year that sets reshoring into motion for the US and in turn, starts the upward rise that puts “Made in the USA” back on the bottom of products and on the top of everyone’s mind!

Since The Great Recession of 2008/2009 we have seen our economy take a turn for the worse, the unemployment rate rise, and exporting and manufacturing go down. With the economic downturn companies were forced to cut costs and pinch pennies and therefore started manufacturing in foreign countries to accomplish those goals. At the time, foreign countries such as China had an advantage and were able to meet these requirements. Even with the larger lead time, the money saved was worth wait. This is no longer the case. With Chinese working wages having risen almost 6,000% since 2001 and the lead time staying stagnant at around 6 months, that cost advantage over the US has shrunk to about 4%.

 For many countries around the world the ends are no longer justifying the means and the lion’s share of the world’s manufacturing market is up for grabs. According to Boston Consulting Group (BCG), 21% of US executives in manufacturing said that they are looking to move production back into the US. They are also speculating that within the next 5 years manufacturing will be increasing for the US and dramatically decreasing for countries such as China, Japan, and Mexico.

With countries shopping around, the US is in the lead with the most to offer and biggest appeal for many reasons. With our existing infrastructures, the US has been able to keep the costs down, with our vast resources we will be able to keep up with the demand of the world, and lastly we also have a geographical advantage and are in good standing with many countries around the world.

With all roads leading to the US, exporting and manufacturing will be the unsung hero of the USA’s upward turn in the coming years. With manufacturing and production entering back in to the country we will see more jobs being created and more money being funneled into our economy. I am in no way am suggesting that this is the end to all our problems, but I do think that it’s a light at the end of the tunnel that allows us to move forward into 2015 with much optimism.

Moving into the future Precision Automation would like to “reshore” you that we are continuing our efforts in providing our clients with efficient and cost effective solutions to any and all of your automation needs. Don’t hesitate to give us a call make Precision a part of your 2015 vision!

Please share this with your friends and colleagues and comment below to let me know what you think. Do you agree? Does your research show you something different? Where do you and your business fit into all of this? How will this affect how you do business in 2015?

Stay up to date with the latest Precision news