Reshoring Manufacturing: What it takes, and how it helps all industries

by Ryan Burns

A few weeks ago I was able to interview Harry Moser, President of the Reshoring Initiative about the opportunities and impacts that reshoring has and will have on the manufacturing community throughout the US and here in Colorado. The full interview can be found on YouTube but some of the key takeaways are shared below. This is the second article in a two-part series. If you want more background on the history of offshoring and the reshoring movement, please see that article.

What if my industry isn’t affected by offshoring, how does it benefit my company?

There are some industries that avoided the offshoring trend: aerospace and defense-focused manufacturing are examples that both have large footprints here in Colorado. But they too will benefit from the effects of reshoring. An increase in overall manufacturing will drive an increase in the labor pool. As manufacturing capacity levels increase, companies will invest more in automation and this will release some of the workforce from unskilled positions to be trained in skilled positions – those increased needs will also augment the community support through training programs and apprenticeships because the needs by skill will be greater. Even if your industry hasn’t seen much offshoring, your raw material and component supply chains likely have. When more is locally-based, your factory will realize the benefits of reduced lead times and increased supplier collaboration.

For those outside manufacturing, other industries in the community usually see the benefits of an increased workforce (especially a higher-skilled, higher-paid one). All the service industry businesses benefit from increased disposable income in the community – more haircuts, more dinners out, more movies, etc. An increase in manufacturing can save many small communities from fading away.

Can we really make this happen? What’s needed?

Skilled Labor

We need to develop a more highly-skilled workforce. Many other developed countries run circles around the US in this regard. We need to end the perception that manufacturing jobs are less, or unstable. We need more robust training programs, especially those that have a mix of on-the-job apprenticeship work along with classroom training. If local/state governments can get this right, their regions will become more and more competitive. Companies won’t build and grow in places where they can’t recruit the right people. “The number one site selection factor for companies as to where they’re going put their factories is the availability of workforce – especially skilled workforce.”

Real Estate

For manufacturing to grow, the physical footprint will need to grow too. Availability of and investment in properties suited for manufacturing will be key. We have all seen the dramatic growth of distribution centers and warehouses throughout the country. As manufacturing moves closer, the need for a large amount of storage will decline. Builders today would be smart to ensure that they construct warehouses in a manner that they could be upgraded and converted to manufacturing facilities in the future. What does that entail? A few key items are: power, ensuring the building will have the capability to run machines, not just lights and packing equipment; parking, most manufacturing operations require more workers per square foot, so ensuring room to expand parking for employees is key; plumbing, a larger workforce means more bathrooms and breakrooms so ensuring there are easy options for making upgrades when needed is imperative.

What’s next? What can I do?

First, support the efforts above with your voice, or with action if you can. If your business is ready to grow and you think reshoring could be viable, use the resources from Manufacturer’s Edge and the Reshoring Initiative to explore the possibility. If you purchase goods overseas and want to better understand your total cost, use the TCO model or other resources to see where domestic supply makes sense.

I’ll end with the acknowledgement that this is not a simple equation. There will be increased tightness in the labor markets initially unless we do a much better job of preparing the workforce. And not every product will be an economic win, but even the most conservative estimates tell us that 20-40% are viable candidates for domestic production.