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The Reshoring Movement


Reshoring, defined as a movement to bring jobs and business operations back to the United States, is an increasing trend emerging among manufacturers in the United States.  This movement is a result of businesses reassessing the cost of doing business overseas and finding those costs are increasing.  Companies with foreign operations are experiencing increasing labor rates, higher fuel and transportation costs and lengthy delivery schedules.  Products produced overseas are generally ordered in large quantities, which may be in part, determined based on the size of the shipping container rather than on customer demand.  Products sourced from overseas can take up to a month or longer to receive, based on the mode of transportation.

Restoring operations in the United States can help companies to reduce their inventory, reduce lead-times, and improve on just-in-time operations by reducing the inventory channel.  Increased inventory turnover can improve the company’s cash flow, reduce overhead costs and improve overall profitability. By reshoring, companies can also enhance innovation and improve on the quality of products by eliminating language barriers and keeping intellectual knowledge nearby to quickly respond to customers’ changing demands.

In a time of high unemployment, additional jobs created by bringing operations back to the United States can help to strengthen local, state and federal economies.  Certain tax credits may also be available to companies for R&D type activities or those who hire additional employees.  Many believe that the reshoring movement helps to strengthen the overall manufacturing industry, due to the emphasis on innovation and growth of a skilled manufacturing workforce.