As the American economy continues to recover from the economic downturn caused by the pandemic, many companies are reconstructing their manufacturing processes from the ground up. One of the major impacts of the pandemic has been the widespread supply shortage felt by virtually every industry. The implications of this shortage have ties back to the 1970s when the push for offshoring began. Many large, reputable companies at that time prioritized their allegiances to their stockholders rather than their employees and, as a result, sought to reduce costs and increase profits by shifting production to wherever could complete manufacturing processes for the lowest cost.
This shift completely restructured the global supply chain and eliminated many American jobs. Today, the pandemic has revealed many of the weaknesses of the global supply chain and has forced American business owners to reconsider whether offshoring is still the most economic manufacturing strategy. Companies that base their manufacturing processes overseas are facing the imminent challenges of customs and shipping costs. These include a ten-fold increase in freight rates in less than two years. The constant bidding wars for manufacturers to get space on vessels have affected shipping costs and created supply shortages across industries. The question remains — will reshoring alleviate the supply shortage?
What is Happening with the Supply Crunch?
While the pandemic exposed many of the weaknesses in the global supply chain, the globalization of manufacturing processes was of political interest well before the pandemic began. Reshoring is currently one of the latest trends in manufacturing as a response to the supply chain issues that have resulted from globalization.
The North American manufacturing industry is currently experiencing growing inflation with increased raw material shortages. This has resulted in longer delivery times as manufacturers struggle to keep up with the growing economy.
Longer lead times are one of the most prevalent supply chain challenges experienced by producers and manufacturers. Companies that base their manufacturing processes overseas retain far less control over the process and turnaround times than companies that use U.S.-based manufacturers. As a result, there is a need for businesses to consider high-quality reshoring to keep their businesses on their feet.
What are the Benefits of Reshoring Manufacturing?
Reshoring brings the manufacturing of goods for American countries back to American soil. Many American businesses have considered reshoring in response to the current supply chain challenges due to the many advantages it offers in the current global economy. Some of the benefits that make reshoring worth the risk include:
- Reduced lead times: The further the consumer is from the manufacturer, the longer the lead times. Besides the distance, additional factors affecting lead times include border inspections and shipping transfer times. Reshoring eliminates these impacting factors, reducing lead times.
- Fewer import tariffs: Historically, businesses chose offshore manufacturing due to the low cost and low import tariffs. Recently, import tariffs have increased and reduced the cost advantage of manufacturing in a different country. Tariffs are applied to goods arriving from a foreign county, so by relocating manufacturing efforts to the United States, businesses can avoid most if not all import tariffs.
- More American Jobs: Emphasizing North American manufacturing can boost the American economy in more ways than just providing greater access to supplies and reducing lead times. Reshoring can provide tremendous benefits to underserved and underdeveloped areas in the United States. Basing manufacturing in these areas provides opportunities for financial security to unemployed populations and can significantly boost the local economy.
- Cleaner Manufacturing: By moving manufacturing processes closer to the end consumer, companies can significantly reduce the number of emissions produced during the transportation of the finished products to the consumer. Maintaining shorter supply chains also mitigates overproduction issues as domestic manufacturers are better positioned to respond to fluctuations in demand.
- High-quality products: Businesses that embraced offshoring were enticed by the idea of low production costs available overseas. Unfortunately, low production costs are a result of using low-quality materials. Reshoring offers manufacturers more control over the process and access to higher-quality materials. Since consumers have grown tired of lesser-quality products, reshoring could be an effective business decision.
Why Should You Reshore with Marlin Steel?
As things currently stand, companies will continue to feel the pressures of the supply shortage, and reshoring may be the answer to alleviate the burden it has placed on businesses and consumers alike. Finding the right domestic vendor is essential to successful reshoring efforts. With a team of experienced mechanical engineers, Marlin Steel designs, tests, and engineers custom baskets and metal parts for high-performance systems in a range of industries, including automotive, aerospace, telecommunications, food processing, medical, and more. We prioritize U.S.-manufacturing efforts and perform all services in-house and offer same-day shipping for all in-stock orders.
We also provide service categories such as metal bending, wire forming, and robotic welding. For more information about high-quality, American-made custom wire baskets contact Marlin Steel.