Manufacturing Trends in 2024 – It’s All About Reshoring

Nearly twenty years ago Thomas Freidman published his book The World is Flat. It was the Financial Times Business Book of the Year in 2005 and sold millions of copies. It is because of the gospel of global trade. In the book, Friedman laid out the basis of offshoring, outsourcing, and supply-chaining. Business owners read the book and accepted that the future was a global economy with both essential parts and essential products manufactured in all parts of the world, most dominantly in China. Offshoring became the vogue and thousands of U.S. companies joined the siren song, closed U.S. plants, destroyed jobs, and nearly decimated the U.S. manufacturing base. That was then, but times have changed. Terms like onshoring, reshoring, nearshoring, new-shoring, and friend-shoring are now more in vogue. This change began to happen on a small scale, about a decade ago. But the alarm lights came on brightly during, and just after, the COVID-19 pandemic crystallized the view of supply chain limitations and risks. As we look at trends in manufacturing for 2024, we no longer see trends toward offshoring. We see quite the opposite.  Five years ago, predictions for manufacturing trends during 2020 continue to include globalism with the acceleration of Industry 4.0 technologies to make things faster, smarter, and of higher quality. Predictions anticipated the growth of analytics, robotics, and additive manufacturing but not reshoring. We couldn’t see, even then, that globalism would soon be dying. The flat world of Friedman would be disrupted even more quickly than the flat world of 1492 was disproved by Columbus.

The post-COVID period represented a real change for much of society, but most specifically the manufacturing arena. Manufacturing companies needed to reinvent themselves to emerge from the pandemic and move into the future successfully. Initially, they are scrambling to meet short-term needs, but they also needed to make efforts to understand the longer-term implications as well and revamp their factories, logistics, and other systems. They needed to look for the long-term implications and changes that would happen to their industry. Recent advances in artificial intelligence, analytics, and IIoT have caused large changes in manufacturing during the prior two decades. Under the banner of Industry 4.0 most manufacturers have welcomed new efficiency in manufacturing and logistics. Due to these changes in technology, the future of manufacturing in the United States had greater potential. Realizing this potential allowed innovation by manufacturers and they began to embrace the tools and technologies available to them to build great efficiencies in their U.S.-based manufacturing plants.

In Q1 2020 a bubble burst.  The coronavirus, COVID-19, swept the world. There were immediate disruptions in manufacturing, transportation, and supply chains. More than 220 US publicly traded companies reported an impact on their supply or production. Stock markets around the world suffered their worst falls in history. The fundamental premises of Freidman’s treatise proved flawed. What had become the new normal for manufacturing was no longer effective.  Low-cost goods were no longer low-cost because they weren’t available. The cost of pharmaceuticals, medical supplies, and medical devices was no longer the critical factor – availability was. Disrupted supply chains that kept critical parts of automobiles unavailable and held up production of entire plants weren’t an acceptable alternative.  Closed borders that prevented engineers’ and business executives’ access to their foreign plants reduced effective manufacturing. Global manufacturing declined as businesses with international supply chains could operate only intermittently.

I work for Re:Build Optimation, a part of Re:Build Manufacturing. Our core mission is to rebuild manufacturing capability here in the United States. So, of course, the trend we are most interested in tracking in 2024 is growth in manufacturing in the US. The need to reshore is becoming more evident to almost everyone. Many companies have gone through shortfalls and delays in the supply chain. Essential medical and pharmaceutical products have been unavailable or in short supply. Ships were held up in delivery; supply chains have become slower and more expensive. Momentum has been building to reshore to improve national security, improve deliveries, and eliminate ever-increasing shipping costs.

In addition to bringing back manufacturing from plants built overseas, many companies are building plants in the US for needed increased production. This is commonly called newshoring. Newshoring means starting new facilities or companies from scratch and running them right here in the US. It may cost a little more initially, but with new tax laws, rebates, and tariffs as well as rising foreign labor costs, this difference may be smaller than in the past. Historically you could get your product cheaper overseas but now there is a risk associated with this. The advantage of new shoring is total control over the process and a reduced risk of the loss of intellectual assets. Newshoring creates new jobs closer to home. The new shoring trend emphasizes triangulating supply chains around centers of innovation, production, and demand, and leads to the creation of new employment opportunities right here in the United States.

At Re:Build Manufacturing we are working hard to rebuild the American manufacturing base.  We are growing and continue to find new opportunities to build or upgrade manufacturing lines here in the US.  I looked around for information that might provide insights into how reshoring is going and what prospects we can see for 2024.

A leading and effective advocate for reshoring is Harry Moser of the Reshoring Initiative.  He’s been educating manufacturers about the value of reshoring since 2010. He says “The mission of the Reshoring Initiative is to bring good, well-paying manufacturing jobs back to the United States by assisting companies to more accurately assess their total cost of offshoring, and shift collective thinking from offshoring is cheaper to local reduces the total cost of ownership.” The Reshoring Initiative provides many resources and extensive data for others to use. One of these they call the Total Cost of Ownership (TCO) Estimator, a tool companies can use to quantify the total costs and risks involved in sourcing from various countries. It factors in calculations of 30 cost elements for each source, accumulating all costs into individual categories and calculating the TCO for each provider.

Two recent articles giving projections for reshoring trends in 2024 used research they received from the Reshoring Initiative.

The first article I found was from Forbes published January 25, 2024, and titled Covid Is Fading, But Reshoring Isn’t. They contend that manufacturers large and small remember well the supply chain nightmares they experienced. Reshoring to the US is being complemented by finding other countries to use as suppliers in addition to China. They point out that China’s total exports to the U.S. grew but their percentage of the total imports fell. They quote data that showed that 69% of U.S. manufacturers have begun reshoring their supply chains and 94% of those are finding it successful. There are many challenges, but the need for supply chain security is spurring them on. Advances in technology and automation are making it possible to keep manufacturing costs more competitive. It is still typically more expensive to manufacture in the U.S. than in China, but bottom-line cost is not the only factor being considered. Geopolitical risk and the potential of future supply chain disruptions have a large influence on decision-making.  They quoted Harry Moser who said, “We see the biggest issue being geopolitics. Hanging over everything is the situation between China and Taiwan.”  “On the face of it, it is more expensive to reshore,” Harry said. “Labor costs can be three times as high, but you have to look at the costs beyond simple prices and look at the total cost of ownership.” Forbes quotes some data from Moser and his optimism, the figures over time seem to bear this out. “Reshoring jobs created in the U.S. were about 6,000 in 2010 when we got started,” Moser said. “They totaled over 350,000 in 2022. Ten years ago, nobody expected that to happen, but it has.” The rate of reshoring has accelerated in the past few years, and this is expected to continue.

Rich Weissman, writing in Octopart’s news and information portal on January 1, 2024, also takes a very positive view of reshoring and makes a strong case for it to continue and grow. He looked at data for reshoring as well as what he calls Friend Direct Investment. He too quoted data from the Reshoring Initiative. Direct Reshoring is outpacing FDI by a two-to-one ratio. Using this data, he shows that reshoring jobs announced in 2010 were 5,770 and 100,487 in 2019. By 2023 they were 406,214 and growing. Key factors that he mentions that are driving the trend include supply chain resilience and geopolitical considerations, as well as economic incentives and policy support, cost considerations, product integrity, technological advancements as well as innovation and intellectual property protection.

Weissman goes on the state that manufacturers should also look at and evaluate the risks of reshoring. Reshoring decisions, he said, should align with strategic objectives, value propositions, and corporate goals, ensuring that reshoring initiatives contribute to long-term growth, sustainability, competitiveness, and customer satisfaction. Companies should conduct risk assessments associated with their reshoring strategies.

Harry Mosher and the Reshoring Initiative focus primarily on bringing back as much manufacturing as possible, at the current U.S. level of competitiveness.   They also work to improve U.S. competitiveness, by advocating for policy changes and by strengthening the U.S. skilled workforce.

To revitalize American Industry, Re:Build Manufacturing has a footprint that spans across the United States. Our sites offer many capabilities, spanning from Brain to Box™, and each Re:Build location works collaboratively to achieve results for our customers. Re:Build develops and manufactures technologically advanced products from concept through production at scale here in the United States using a Brain to Box™ process. Specialized engineering firms often lack a manufacturing footprint, supply chain capabilities, or commercialization experience.  Re:Build Manufacturing strives to be a trusted partner for manufacturing firms. We partner with a wide range of customers, from agile, fast-moving startups to Fortune 500 companies that represent some of the world’s most well-known brands in the fields.