My APICS Inland Empire Chapter hosted a program on “Changing Trade Policies and its Effect on Reshoring” with Michele Nash-Hoff, author of “Rebuild Manufacturing – the key to American Prosperity”. And, interestingly, the Institute of Management Accountants (IMA) Orange County chose “Onshoring Profits: Manufacturing is Not Dead Yet” from a long list of topics and asked that I speak on its impact. Thus, it seems only appropriate to discuss a few common themes:
- U.S. firms are leaving China as conditions worsen. Actually, 25% of U.S. companies active in China have moved some operations out of the country. 38% relocated to North America.
- In 2014/2015, parity was reached between offshoring & returning jobs.
- 7 industries have reached the tipping point of returning to the U.S. and these sectors account for 70% of U.S. imports. For example, computer electronics, electrical equipment, and furniture make the list.
- Using purchase price or landed cost do NOT capture total cost of ownership and can lead to incorrect sourcing decisions from a financial viewpoint.
- 70% of executives are thinking about reshoring.
Where are you sourcing from currently? Don’t just jump on the new bandwagon of reshoring – but you should give your total cost of ownership a second look as well as dig into your customers’ expectations and sourcing impacts. You might just be surprised as to what this new view tells you!
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