May 1, 2014
Emily McMackin
Emily McMackin
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A Rising Tide: Wave of Companies Reshoring Continues to Build

Manufacturing Plant Screen Welder

More good news on the reshoring front: The ranks are growing for companies making the decision to bring production, customer service and IT infrastructure back to the United States. Within the year, more than one-third of U.S. businesses expect to move work for production and services back home, according to a recent Realities of Reshoring survey conducted by Grant Thornton, a top accounting and advisory firm. If this happens, as much as 5 percent of overall U.S. procurement could return to the U.S., the survey points out.

Reshoring continues to be a boon for cities, especially small Rust Belt towns like Greenville, Ohio — a town of 13,000 just 30 miles northwest of Dayton. Whirlpool recently announced plans to invest $45 million to double the size of its small appliance plant there to handle production reshored from China. The decision will create more than 400 additional jobs at the plant, which is best known for producing KitchenAid mixers.

Of 275 CEOs, CFOs, presidents and partners surveyed by Grant Thornton across industries ranging from manufacturing to retail to wholesale/distribution, executives said they were likely to bring the following categories of work back to the U.S. from overseas facilities (see infographic here):
•IT services (42 percent)
•Components and products (37 percent)
•Customer services or call centers (35 percent)
•Material (34 percent)

“These results could dramatically impact U.S. trade balances, and should provide an enormous boost to domestic manufacturers, retailers, wholesaler/distributors and service providers,” said Wally Gruenes, Grant Thornton’s national managing partner for industry and client experience, in an interview with Supply Chain 24/7, an online resource for supply chain, logistics, distribution and transportation news.

Initially, executives moved production and service work overseas to cut costs, but as wages, energy and transportation costs continue to rise in China and elsewhere, the U.S. is regaining its advantage as a low-cost manufacturer. According to a recent survey by the Entrada Group, a majority of executives in top markets named the U.S. as the most attractive location for low-cost manufacturing, with Mexico and China ranking second and third, respectively.

While cost efficiency was one of the key reasons executives cited in Grant Thornton’s survey for opting to reshore, it wasn’t the only motivation. Timely delivery of products ranked higher, with 29 percent of executives citing the cost and speed of shipping as their top concern. Improved quality of products made and services rendered in the U.S. also factored heavily into reshoring decisions.

More companies are choosing to reshore as business partners in the supply chain make them aware of tangible and intangible cost savings associated with keeping production and service closer to their customers, Gruenes said.

“A complete analysis should consider the timely delivery of supplies and materials, quality issues and the process of addressing any defects,” Gruenes told Supply Chain 24/7. “A local supplier can fix these issues more immediately, and that creates a win/win for the supplier and the manufacturer.”

Is reshoring catching on in your community? If so, how has it benefited manufacturers there? Please share your success stories below.

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