6 Examples of Reshoring Companies
Reshoring, or onshoring, sometimes referred to as inshoring, is an increasingly common strategic business decision that brings back manufacturing or other business operations to a company's home country, withdrawing this from overseas locations. This trend gained prominence as companies sought to address various challenges associated with offshoring, such as: rising labor costs, supply-chain disruptions, intellectual property concerns, and the desire for greater control over production processes.
The list of companies that have undertaken reshoring to the US in recent years is considerable. Listed below are 6 examples of reshoring companies:
Walmart is a multinational retail corporation that operates a chain of discount department stores, grocery stores, and hypermarkets in the US. Walmart's reshoring initiative was launched in January 2013 and programmed for the following decade. It entails a commitment to invest an additional $250 billion in purchasing US-made products for its US stores. The company anticipated that it would generate one million new jobs in the United States, including approximately 250,000 direct manufacturing positions and 750,000 indirect jobs in support and service sectors.
Several key drivers affected Walmart's reshoring plan at the start. Rising wages and improving working conditions in overseas manufacturing hubs such as China eroded the cost advantages of offshoring. Labor costs in China increased by 15 to 20 percent annually until a recent plateau, reducing the cost advantage over lower labor-cost US states. Couple this with various risks such as: transportation disruptions, potential tariffs, intellectual-property concerns, reduced “home” energy costs, and potentially reduced quality of products becomes erosive of the offshoring advantages. Consumer preferences have shifted, with many consumers now seeking higher-quality, locally-produced products bearing the "Made in the USA" label. It should be noted that the success of such slogans is modest when a lower-cost alternative remains present in the market.
Forid is an automobile manufacturer that produces and sells commercial vehicles and luxury cars. One of the most notable aspects of Ford's reshoring efforts has been its substantial investment in US manufacturing facilities. Ford has announced multi-billion-dollar investments in its American plants, focusing on modernization and expansion. These investments are designed to increase capacity, enhance efficiency, and support the production of new and innovative vehicles. Ford's reshoring is particularly significant in its electric vehicle (EV) manufacturing. The company continues to invest heavily in EV production in the US, with EV assembly plants and battery manufacturing facilities.
The COVID-19 pandemic exposed vulnerabilities in global supply chains, prompting the reevaluation of sourcing strategies. Ford's adjustments in bringing critical manufacturing processes back home have generated a more resilient supply chain. Ford's reshoring efforts often involve the integration of Industry 4.0 manufacturing processes, greatly reducing the consequent number of jobs created locally. This increases company productivity and significantly moderates the overall employment effect.
GE Aviation specializes in the design and production of aircraft engines, components, and related technologies. Its reshoring efforts in the US reflect a strategic shift towards bolstering domestic manufacturing capabilities. GE Aviation has made considerable investments in advanced manufacturing facilities within the US. These are equipped with cutting-edge technologies to improve production efficiency, precision, and quality. This is a mix of reshoring initiatives, ongoing productivity improvement, and IP protection/security.
GE Aviation has engaged with government agencies such as the Department of Defense (DoD), for support in these reshoring efforts. This has provided financial incentives, research collaboration, and regulatory support for their process. Efforts to procure materials from domestic suppliers further contribute to the resilience of its supply chain and stimulate the growth of US-based material providers, improving wider aspects of local employment and economic activity.
Hubbardton Forge manufactures custom and low-volume lighting fixtures that focus on elegance and artistry, craftsmanship, and materials. At the core of the company's reshoring efforts is an intention to preserve and celebrate traditional craftsmanship.
The company's decision to produce its lighting fixtures in Vermont stems from an asserted belief in the value of skilled artisans who handcraft each piece. This commitment to artisanal craftsmanship is a significant marketing principle, in an industry marked by low-skilled mass production. Reshoring (or never offshoring) reflects Hubbardton Forge's strategy, marketing, and culture. The company places a strong emphasis on the sustainability of its materials and environmentally neutral manufacturing practices.
By reshoring production, Hubbardton Forge achieved more stringent quality-control measures. The stated commitment to craftsmanship and quality tells customers that they’ll receive durable, well-crafted products that endure. Their domestic manufacturing allows for greater customization and design flexibility. Customers can work closely with the company's craftspeople and designers to create lighting fixtures that match their specific design preferences and requirements. This level of personalization sets Hubbardton Forge apart from its competitors. Local supply and development allows them to shorten lead times for customers. This agility is a valuable asset in an industry in which design trends evolve rapidly.
US manufacturers like Zentech offer services that step up above many of their overseas competitors in terms of automation, agile operations, and deep specializations. A key offering it promotes is the inclusion of PCB (printed circuit board) repair services and post-sale support, addressing ongoing costs that are often overlooked during initial manufacturing decisions and restoring/sustaining high-value products, often beyond end-of-life.
It should be noted that Zentech is part of the reshoring environment and is not itself a reshored supplier. Zentech bases its success on what it presents as compelling reasons to keep PCB prototype and mass-production supply in the US, reshoring rather than offshoring. Several factors contribute to the resurgence of reshoring in electronics manufacturing. China and other offshore manufacturing hubs have seen significant cost increases in recent years. China's cost of living and labor rates have been steadily rising, impacting manufacturing expenses. India faces similar challenges with increased living costs, though there has been less increase in labor costs. In itself, this is an argument in favor of reshoring, rather than participating in the impoverishment of Indian workers.
Caterpillar Inc. is one of the world’s leading manufacturers of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines, among others. Its reshoring efforts result from complex market dynamics, including: changing customer demands, regional preferences, ongoing cost-benefit analysis, and the need for agility in response to market changes. Caterpillar can better localize its products by reshoring particular manufacturing processes.
The company's equipment and machinery often require complex and specialized components. Bringing some critical, high-value, or IP-constrained manufacturing processes back to the US reduces the exposure to global supply chains that are increasingly seen as suffering instability and fragility.
Reshoring allows the company to maintain closer and more responsive control over the manufacturing process, ensuring that its equipment meets the highest quality standards. This enhances customer satisfaction and market position, while ideally minimizing potential issues related to product reliability and performance.
Reshoring is a set of strategic business practices in relocating certain manufacturing, production, or service operations that were previously offshored to other countries, back to the company's home country or a closer domestic location. It generally involves reversing the decision to offshore these functions and returning them to the company's domestic operations. In some cases, reshoring is also a description of never-offshoring. Reshoring is a strategic response to changing economic, geopolitical, and market dynamics—exactly as offshoring is. Both tools should be available in a well-run company, to balance and re-balance dynamic market responses.
To learn more, see our article on What is Reshoring.
Companies choose to reshore for a huge range of diverse reasons, driven by a combination of economic, strategic, and operational factors.
Reshoring can help companies regain tighter control over their production costs and maintain competitiveness. It allows companies to have better oversight and more responsive control over the quality of their products, reducing the risk of defects and recalls. Global supply chains are increasingly understood to be vulnerable to disruptions, including: natural disasters, political instability, trade disputes, and global crises like the COVID-19 pandemic. Reshoring certain operations can reduce exposure to these risks and enhance supply-chain resilience by shortening supply lines.
Closer manufacturing/services proximity to the domestic market enables faster response to changing customer demands and market conditions. Concerns about the protection of intellectual property, trade secrets, and proprietary technology can become hot-button issues that drive companies to reshore operations. Domestic operations will generally offer more robust legal and regulatory protections for intellectual property.
Reshoring can also lead to the creation of jobs in the home country, supporting local economies and communities. Additionally, reducing the carbon footprint associated with long-distance transportation and promoting environmental sustainability can be important drivers for reshoring.
Some prominent industries have undertaken reshoring initiatives, of various sizes and intentions. Industries such as: automotive, electronics, machinery, and textiles have seen significant reshoring efforts. These are generally driven by factors such as: rising offshore labor costs, quality-control concerns, and the need for more agile and responsive production. Technology companies, including electronics manufacturers and software developers, have reshored operations to reduce supply-chain risks, satisfy the urge to protect intellectual property, and enhance innovation and agility.
Certain segments of the food and beverage industry have reshored to meet consumer preferences for locally sourced and fresher products. This has also been driven by increasing safety concerns about the distant-souring of foods, local scandals in offshoring regions, and a perception of risk among consumers. Other industries that are reshoring include: the pharmaceutical and healthcare, furniture and consumer goods, and energy sectors.
No, disaffection with the outcomes of offshoring to low-wage economies affects most industries across the higher-wage economic regions. As a result, in particular, of the evolving employment regulation and disrupted logistics of recent years, reshoring has become an increasingly attractive option for companies in the US, Europe, and Australasia.
Reshoring offers several benefits to companies and economies:
- Improved cost control.
- More responsive quality assurance.
- Robustness in supply chains.
- Increased and more flexible market responsiveness.
- Job creation in the home economy.
- Greater comfort in intellectual property protection.
- Improved appearance in sustainability.
- Customization to local market needs rather than world norms.
To learn more, see our article on the Benefits of Reshoring.
Yes, reshoring can be beneficial for companies under the right circumstances. Ideally, the process allows them to benefit from a selection of regaining control over production costs, improving product quality, enhancing supply-chain resilience, and more agility when faced with market changes. Companies can also protect intellectual property more effectively, which is an issue that often seems important, although IP leakage is much lower than most companies imagine. It allows them to support local economies through job creation. However, the decision to reshore should be based on a thorough analysis of cost-effectiveness, market dynamics, and specific industry factors.
Yes. Reshoring can have positive economic impacts by contributing to job creation and economic growth in the domestic market. It supports local industries, strengthens and deepens supply chains, and reduces reliance on less reliable service regions. Reshoring also enhances a country's industrial base, which can have long-term economic benefits, including increased innovation and technological advancement. However, the overall economic impact depends on various factors, including: the scale and scope of reshoring initiatives, industry dynamics, and the broader economic environment. Local impacts can be moderately significant. But there isn’t large-scale evidence for serious national-scale benefits, beyond the fleeting political advantage.
Yes. Reshoring can improve sustainability by reducing the carbon footprint associated with long-distance transportation. Producing goods closer to the point of consumption reduces greenhouse gas emissions and energy consumption related to shipping. However, since surface shipping has very low emissions, this impact is relatively modest.
Additionally, reshoring may encourage the adoption of more environmentally friendly production processes and technologies, as companies strive to meet local environmental regulations and consumer preferences. This impact is liable to be larger, as companies opt for cleaner methods.
However, the extent to which reshoring improves sustainability depends on various factors, including: the energy sources used in domestic manufacturing, the efficiency of production processes, and the overall environmental practices of the company.
In the most basic terms, reshoring brings work back from a geographically distant, lower-wage (or employment-law) region to the home country, whereas nearshoring brings the work into the home country’s geographic region, but not home.
To learn more, see our article on Reshoring and Nearshoring.
Reshoring and offshoring are the opposite sides of the same coin. Offshoring moves work—manufacturing, materials processing, service provision, etc.—from a high-wage, high-regulation economy to a lower-wage, lower-regulation economy (often geographically distant).
Reshoring reverses the process and returns work from this low-wage, low-regulation economy to the higher-wage and more regulated home economic region of the brand holder. In some references, reshoring also serves to describe never offshoring, which essentially has the same local impact but renders fewer headlines.
This article presented examples of reshoring companies, explained each of them, and discussed the various industries that reshore. To learn more about reshoring companies, contact a Xometry representative.
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