Reshoring is gaining momentum — a lot of it. Manufacturers are rapidly bringing production back to the United States from overseas or at least closer to home in a related move called nearshoring. Both reshoring and foreign direct investment have grown, from generating 11,000 new U.S.-based jobs per year in 2010 to more than 300,000 in 2022, and another 180,000 jobs recorded in just the first half of 2023. Advances in automation are playing a big role in this phenomenon by helping domestic producers to overcome many of the challenges that drove production offshore in the past.
For decades, low factory prices available from offshore manufacturers led U.S. companies to send work overseas. But in 2020 the COVID-19 pandemic brought global supply chains to a halt and sent workers home. The business response to the public health catastrophe accelerated deployment of automation in North American factories. A variety of U.S. legislation further incentivized domestic manufacturing. As a result, many companies are rethinking the location of their manufacturing footprints.
To learn more about reshoring and nearshoring, including both benefits and challenges, and to understand how advances in automation enable cost-competitive domestic manufacturing, we spoke to automation and reshoring experts at Futura Automation and Reshoring Initiative®.
What is reshoring?
The Reshoring Initiative defines reshoring as “the practice of bringing manufacturing and services back to the U.S. from overseas.” The organization’s website shares that in addition to strengthening the U.S. economy, reshoring benefits domestic companies by reducing the total cost of products and spurring product innovation.
What is nearshoring?
Nearshoring is similar, except that it brings manufacturing not back to the United States, but closer to it. A top factory automation trend of 2024, nearshoring is the relocation of foreign manufacturing or business operations, usually from Asia, to nearby countries or regions, typically close to the company’s base of operations. For U.S. companies, North American countries — Canada, Mexico, and Caribbean nations — are popular nearshoring locations.
Reshoring trends
Mentions by U.S. firms of reshoring, nearshoring, and onshoring — a synonym for reshoring — doubled year over year since the start of 2022, according to data compiled by Bloomberg.
“The first 15 years of my career were more about consolidation: moving manufacturing to Mexico or Asia or to Eastern Europe,” Joe Cutillo, CEO of Sterling Infrastructure — a provider of e-infrastructure, building, and transportation solutions — is quoted in Fortune. “It is truly the first time in my life I’ve seen stuff coming back.
