American manufacturers know the value of bringing component part manufacturing back to the United States โ do you?
In this post, we make a case for why itโs time to start bringing your manufacturing back to the United States as part of a practice known as onshoring or reshoring. Read on to discover all that it can provide.
Onshoring Alternatives Are Fazing Out
The Presence of Offshoring
Before we talk about onshoring, letโs address the alternatives that are often used. Two of the routes that companies usually take for outsourcing goods and services are offshoring and nearshoring, using these approaches to achieve lower costs.
Offshoring is the practice of hiring a third-party firm to perform work in a nation other than where the primary business is located. While these foreign nations might offer less stringent labor laws and lower production costs, there are also some significant drawbacks. Challenges can include (but are not limited to) problems arising from different time zones, language and cultural barriers, and cyber security threats.
These misalignments can put stress on the schedules of your internal team (especially with time zones that can be up to 12 hours different). This means that problems could take longer to be solved and communication can be more sporadic. Additionally, you might find yourself lengthening deadlines since work can take longer in other parts of the world. Think about the difference in holidays, culture, and regular workdays. You will also need an exceptional translator who understands your business and industry, as you donโt want language barriers to cost your team delays due to communication.
Is Nearshoring Any Better?
Now that you know the risks associated with offshoring you might believe that the problems caused can be solved by bringing your project closer. The term used for this approach is nearshoring. In such cases, the outside company is a little closer to you, but is still found in a different country. Nearshoring might fix the time zone issue, which can improve the schedule of your employees and speed of communication. However, it really only solves this one aspect, and the differences in holidays, language barriers, cultural understandings, and other factors all remain.
The argument has been made that nearshoring reduces the costs of a job because of cheaper labor, but the practice does not have the same benefits that come with manufacturing products here in the States. Check out this tool that can help you estimate the cost difference between your current offshore/nearshore manufacturing and what costs would look like if you opted for reshoring.
Reshoring Is the Answer!
So, what exactly is reshoring? Reshoring is the process of bringing the production and manufacturing of goods back to their original country. It can also be referred to as onshoring, inshoring, or backshoring. Reshoring started gaining popularity during the COVID-19 pandemic, and the trend shows no sign of slowing down anytime soon.
As of January 31, 2023, there have been over 1.6 million jobs returned from previous offshoring. According to the Reshoring Initiativeร there have also been over 6,400 cases of manufacturing companies that have brought work back to the United States with their onshoring initiatives. A study by Forbes additionally showed that 69% of U.S. manufacturers started reshoring their supply chains, and 94% of them reported success in doing so. But why are these companies making the switch now?
Onshore manufacturing was formerly associated with hefty price tags. Now, many manufacturers say that advancements in technology and opportunities for better security in supply chains are reducing costs and making reshoring more viable. Furthermore, additive manufacturing and 3D printing are reducing the need for complex global supply chains, facilitating the transfer to localized production.
Companies of all sizes are reshoring, but some prominent examples include:
- GE Appliance Park
- Ford
- Walmart
- Zentech
- Hubbardton Forge
These companies are part of many different industries, such as electrical equipment, transportation equipment, computer and electronic products, and beyond. The pharmaceutical industry is another sector where onshoring is becoming popular.
Why are these corporations and diverse industries being drawn to reshoring? American companies are increasingly recognizing that costs, risks, and strategic impacts that have been previously pushed aside are large enough to reconsider. Proximity is important, especially for the courtesy of team member schedules and ease of communication. Additional reasons that companies are reshoring include:
- Lower lead times
- Higher product consistency and quality
- Rising offshore wages
- The presence of skilled workforces in the U.S.
- Local tax incentives
- The ability to tout โMade in the USAโ
- Better responsiveness to the changing demands of customers
- Less regulatory compliance risk
- Innovation and product differentiation
And, of course, reshoring can also help strengthen the U.S. economy, as it can play a role in:
- Balancing the trade and deficit budget
- Reducing unemployment by creating jobs
- Lessening income inequality
- Motivating skilled workforce recruitment
- Demonstrating that manufacturing is a growth career
Practice Metal Stamping Reshoring with Valco
Valco is proud to manufacture all of our products here in the USA. If youโre looking for a company to start your onshoring initiative with, weโre ready to provide you with expert metal stamping services. Weโre proud to say weโre currently working with companies across varied industries that have made the decision to start onshoring their overall operations. Weโve been in business since 1967 and have been tackling the metal stamping for such companies for decades, and weโre pleased to see American manufacturing being valued once again.
Companies choose to work with us because of our innovation, dedication, and expertise. We are ISO 9001:2015 certified with design, and we emphasize quality throughout our entire production process. Our team currently has plenty of ready-made products on hand but is also adept at creating new solutions whenever called for. This means that we are ready to step in and help any company that is looking to proceed with reshoring their metal stamping.
And if you need to go the custom route, we can develop a custom prototype based on your project needs and let you test them before you buy in bulk, allowing you to be confident in your order. Bring your manufacturing home to the United States and see the quality difference with Valco!
Start Your Onshoring Process Today!
At the end of the day, we want to strengthen the American economy and boost community ties through quality work. If youโre thinking about onshoring or reshoring, consider this post as a sign to get the process started. And if youโre in an industry where you need a reliable metal stamping company in the USA, look no further than Valco Valley Tool & Die.
Be sure to contact our team with any questions you may have. We look forward to starting this journey with you.