Covid unraveled significant portions of the global supply chain. Today, the supply chain is re-assembling in new ways, reflecting widespread enthusiasm among manufacturers for onshoring and reshoring initiatives.
There is certainly an appetite for onshoring and nearshoring, particularly among large manufacturing companies, says Bryan Bird, President of Americas at Universal Robots.
“We speak with a broad mix of enterprise sizes and while every company is unique, we find that SMEs typically tend to be contained within one region of the world already. It’s a different conversation for large enterprise providers however, because they moved more of their supply chain to regions that are far flung away from their home base,” says Bird.
One of the most important factors driving onshoring and nearshoring initiatives, especially for North American companies, is the changing dynamic around industrial wage differentials between the United States, China, and Mexico, explains Bird.
Chicago-based RCM Industries successfully deployed two cobots from Universal Robots on high precision CNC machine tending tasks to gain a global competitive advantage and keep manufacturing jobs in the U.S. Credit: Universal Robots
In 1995, manufacturing wages in the United States were 30 times greater than those in China. Today they are just 3.5 times greater, Bird notes. Meanwhile, labor rates in Mexico are comparable to the current labor rates in China, making nearshoring production to Mexico an attractive proposition for many U.S. companies.
“Mexican manufacturing is definitely benefiting from nearshoring, especially with the automotive sector looking to bolster the strength of their supply chain, shorten supply lines, and boost agility by having their supply chain shorter and closer at hand in Latin America. That’s definitely a trend that we’re seeing,” explains Bird.
Demand for automation soared during the pandemic, but supply chain ripple effects within the automation sector itself saw delivery times for robots and other hardware extended by months and even years, says Natalie Adams, Product Marketing – Robotic Software, at Hypertherm Inc.
Robotmaster is offline programming and simulation software that enables production lines to keep running even in high mix/low volume production environments, enabling manufacturers to onshore despite widespread labor shortages. Credit: Hypertherm Inc.
