Although it seems before the trend of the return of manufacturing to North America in the face of supply chain issues, this movement has been in gear for many years. More than a decade ago, News Design began to run stories about reshoring.
Ten years ago, North American manufacturers were already bored with production in Asia. Labor costs are rising in China, language and time-zone barriers are difficult, and time and shipping costs are issues. More importantly, companies want their production to be closer to their customers so that they can be more responsive to customer needs.
Those concerns intensified sharply during the pandemic and with the resulting supply chain shortages. So, it’s no surprise that reshoring is gaining momentum. In addition to the issues noted above, we already have a White House that is relatively happy to support domestic production, both in its rhetoric and in actual dollars.
Reshoring Becomes Real
According to a study by the Reshoring Institute, by 2021 the private and federal push for domestic supply of essential commodities has pushed reshoring to add 261,000 manufacturing jobs. As a result, the total number of reshored jobs has risen to 1.3 million since 2010. For the second consecutive year, jobs created by reshoring have grown by 100%. Additionally, the number of companies reporting new reshoring has set a new record of over 1,800 companies.
A report from Kearney found that spending on capital goods in the U.S. will rise in 2021 as more companies seek to invest in manufacturing assets in North America. The report noted that manufacturers are looking for the “best cost” rather than the “lowest cost.” They weigh cost against other factors such as supply chain stability and sustainability. Companies began to look at each other to see if there was enough critical reshoring mass to build a supplier ecosystem – either domestically or in a nearby location – that could rival China.
US Manufacturing works
One company that has invested in US -based production is maxon precision motors, a division of maxon precision motors of Sachseln, Switzerland. The company opened 59,000 sq. Ft. foot manufacturing facility at Myles Standish Business Park in Taunton, Mass. The new building is designed to provide engineering design and production operations designed to significantly advance maxon’s presence and capabilities in North America.
The facility expands maxon’s capabilities. According to maxon, US customers will benefit from closer collaboration that will provide value -added opportunities with faster turnaround. Plus, a localized supply chain with domestic vendors can help build stronger customer relationships while reducing lead times.
Part of the decision to build a manufacturing facility in North America is that the difference in labor costs has changed since the offshoring trend began in the 1990s. “In 1995, the difference in labor costs between North America and China was 30 times. Now it’s a matter of three,” said Carsten Horn, application engineering manager at maxon News Design. “Transportation costs for offshore labor are rising. Only pure numbers are putting pressure on U.S. companies to reshore.”
As for building a supply ecosystem to support domestic production, maxon is already in place around the world. “We have a global network for sales and sourcing. We get ingredients from Germany, France, and the Netherlands, “Horn said.” That gives us the ability to balance our supply. We’re a specialized market, with specialized suppliers. “
Proximity to customers is another aspect of the decision to make goods in North America. “Being close to our customers is one of our goals,” Horn said. “You have a time advantage if you are close. If there is a problem, you are using the same language and you are in the same time zone. If you combine that with other goals, it makes sense. That’s worth spending a few extra dollars. ”
Deloitte opens Smart Factory in Wichita, Kansas
Deloitte announced the opening of The Smart Factory @ Wichita. The facility brings together collaborators that include AWS, Dragos, Infor, SAP, Siemens, and Wichita State University as well as builders such as Check Point, HPE, Tenable, ServiceNow, UiPath, Verizon, and more.
The goal of the “smart factory” is to use technology to solve supply chain difficulties. Deloitte said that with increasing demand for products amid a volatile supply chain, labor shortages, and a volatile global economy, many manufacturers are relying on old legacy systems. Organizations that engineer an end-to-end smart manufacturing operation can increase efficiency, sustainability, and cyber security. They can also use technology to build stability.
Proximity to a US university is a handy benefit when creating a North American manufacturing facility. “As a manufacturing and technology hub, we continue to capture top talent and business in Wichita,” said Rick Muma, president of Wichita State University. “Wichita State University’s partnership with Deloitte deepens opportunities for our students and community to have access to the world’s leading innovators and futurists coming to The Smart Factory @ Wichita.”