Compelling Reasons to Reshore
During the early to mid 2000s, there was a seemingly inexorable shift toward procuring parts from low-wage Asian countries. In the years after the 2007-2009 recession, U.S. economic growth was surprisingly slow, and a Congressional Research Service report referenced offshoring as a contributing reason.
In 2010, Harry Moser established The Reshoring Initiative, with the mission of bringing well-paying manufacturing jobs back to the U.S. by helping companies more accurately assess the total cost of offshoring, and shifting collective thinking to the maxim that local ownership reduces the total cost of ownership.
The Initiative’s arrival was well timed, as some businesspersons were already beginning to question their own dependence on over-extended supply chains. Rising shipping costs, delivery delays, and issues related to time zone and language differences proved aggravating; and more significant, some began to find that the substantial financial gain they anticipated from offshoring was far less than expected. Wages in China rose and soon enough, manufacturers wishing to secure the lowest price per part found themselves moving from China to still other developing nations.
Then came the pandemic, which opened America’s collective eyes to the perils of depending on potentially unstable foreign markets for key products. As Mark Mobius, founder of Mobius Capital Partners, told CNBC in 2020, “A lot of buyers and a lot of the people depending on the supply chain in China are now having second thoughts and are beginning to diversify their supply chain as much as possible to be closer to home.”
That same year, the American Foundry Society rebranded an earlier magazine with the new title of Casting Source with a broader focus on the entire manufacturing supply chain for castings. Given the changes in the economy since then, the AFS move looks prescient.
Fast forward to 2022, and North America’s supply-chain challenges have worsened, with truck-driver shortages and huge delays at the ports. Delivery time to the U.S. from China is estimated to be 50% slower—and much more expensive. Casting Source readers know this first hand, as the very parts and materials they need are often on back order.
Inflation is at a 40-year high, with rising fuel and transportation-labor rates adding to the cost of offshored work. The war in Europe, coupled with U.S.-China tensions, are the latest factors pointing toward reverse-globalization. As Moser stated recently, “Without having to worry about geopolitics and the U.S./China ports where things can go wrong, the risk comes down dramatically.”
More than 200,000 jobs were created in 2021 thanks to reshoring and foreign direct investment, and we appear to be in the early innings of this trend. Parts buyers and designers are invited to join AFS at CastExpo 2022 in Columbus, April 23-26, where a six-part Buyer and Designer Track will feature Moser and other experts. Visit CastExpo.com or contact Shannon Wetzel at firstname.lastname@example.org for details. CS
Click here to read the column in the March/April 2022 digital edition.