Reshoring: When and Where It Makes Sense
Ultimately, reshoring decisions require a balanced, nuanced evaluation of where and when it makes sense.
With the new year upon us, manufacturing leaders are gathering with their teams to map out strategies for the year ahead. These plans often focus on enhancing efficiency, boosting profitability, and strengthening market performance. One key decision that impacts all three variables is where production occurs geographically.
The ongoing debate over offshoring, nearshoring, and reshoring has long been a cornerstone of manufacturing strategy—and for good reason. At scale, these decisions influence national GDP, labor forces, and global competitiveness. For individual organizations, they affect supply chain resilience, distribution networks, corporate reputation, and financial performance.
My company’s 2024 State of Manufacturing survey reflects this complexity: 47% of North American manufacturers report having no plans to reshore. The reasons are varied and often tied to the challenges and trade-offs involved. Reshoring is rarely a black-and-white decision, nor is it a one-size-fits-all solution. While patriotism, supply chain resilience, and geopolitical concerns are strong arguments for reshoring, factors like free trade, cost, labor availability, and globalization also demand attention.
Ultimately, reshoring decisions require a balanced, nuanced evaluation of where and when it makes sense.
Are the Benefits Worth the Costs?
At first glance, reshoring offers numerous benefits. Shorter supply chains are often more resilient, supporting local economies, creating jobs, and demonstrating a company’s commitment to domestic investment. These outcomes can significantly enhance a business’s reputation with customers and stakeholders.
However, the challenges of reshoring cannot be ignored. Manufacturers must identify or even construct new facilities equipped to meet operational needs. This includes sourcing materials, building distribution partnerships, hiring skilled teams, navigating regulatory requirements, and carefully communicating the shift to customers and partners. These steps require significant investment, time, and strategic planning—all while potentially sacrificing the advantages of existing facilities.
For many manufacturers, offshoring provides critical advantages. Cost efficiencies, regulatory flexibility, workforce availability, and established infrastructures often underpin their ability to succeed year after year. For these organizations, uprooting operations may not be practical or beneficial.
At the same time, others may find that offshoring is holding them back—whether through operational inefficiencies, supply chain vulnerabilities, or challenges in meeting market demands. Every facility is unique, and leaders must carefully evaluate their specific circumstances to determine the best course of action.
Take the Long View
Reshoring is a transformational decision, and leaders must take a long-term perspective when evaluating its feasibility.
For some, reshoring may not be practical in the short term but could become viable in the future as conditions evolve. Others may find that now is the perfect time to take steps toward relocating operations. The right approach depends on aligning strategic objectives with an honest assessment of internal and external factors.
In many cases, manufacturers may need more time, resources, or data to make an informed decision. Starting with a clear understanding of their operational constraints, market demands, and technological capabilities can lay the groundwork for a future reshoring strategy.
The Bottom Line
Reshoring isn’t about making decisions based on sentiment or trends—it’s about weighing the benefits and costs thoughtfully to ensure long-term success. Beyond operational considerations, manufacturers should also reflect on the broader implications: contributing to national economic resilience, creating local jobs, and fostering innovation to reduce the cost burdens often associated with reshoring. Geopolitical stability, supply chain security, and a commitment to advancing domestic technology can provide long-term advantages that extend beyond individual organizations.
While the answer will look different for every business, the key lies in equipping leaders with the right information and a commitment to balancing short-term realities with long-term opportunities.
