In the aftermath of pandemic-related supply chain bottlenecks, global economic turbulence, and geopolitical risk, the U.S. is seeing manufacturing return to the country at a rapid pace. Current projections anticipate over 406,000 manufacturing jobs coming back to U.S. soil in 2023—a record high and monumental shift for the manufacturing industry.
For large and small manufacturing firms, the reshoring movement brings new opportunities to shockproof supply chains, control costs, and shorten lead times—but also new challenges. From financing new facilities to implementing advanced technology, see what firms can expect from the transition to domestic manufacturing.
Benefits of reshoring: stabilized supply chains and lower transportation times
Reshoring brings manufacturing centers closer to domestic markets, producing shorter supply chains and hardier transportation networks. With facilities within arm’s reach instead of oceans or continents away, firms reduce their vulnerability to global disruptions like port bottlenecks, natural disasters, pandemics, and geopolitical conflicts.
What’s more, shortening supply chains reduces lead times for domestic manufacturers, as well as overall transportation and logistics costs, positioning them for future growth even if global disruptions reoccur.
Challenges of reshoring: finance capital investments and limit consumer costs
The transition to domestic manufacturing is not without its hurdles—and the first among these is financing capital investments in property, equipment, and more. Manufacturers should take time to explore government incentives, tax credits, and other financing available to domestic manufacturers. They may also want to consider contracting out to existing U.S. suppliers to lower costs.
Another challenge manufacturers may face is the need to increase customer costs, potentially reducing demand and adding additional strain. However, many companies are finding ways to keep prices lean by incorporating time-saving technologies into their manufacturing process.
Top 3 takeaways for US manufacturers
The bottom line? Reshoring is a major, and highly welcome, undertaking for manufacturers, whether you’re expanding an existing domestic facility or starting fresh.
For manufacturers that want to make reshoring part of their strategic plan, it’s wise to keep the following major considerations in mind as you transition.
- Increased labor requirements: As companies transition their manufacturing operations, they will have to shoulder the costs and complications of hiring a new workforce. Between navigating labor sourcing and handling training requirements, it may take time and money to build up a knowledgeable team.
- New real estate needs: Reshoring manufacturers will have to acquire space to establish a new plant or expand an existing facility. A move like this brings land and real estate costs, as well as considerations about distribution channel access.
- Rise of the ‘Industry 4.0’: As U.S. manufacturers increase domestic activity, we can expect to see a renewed focus on automation, robotics, and other aspects of the ‘Industry 4.0’. These advanced technologies can help balance out re-shoring expenses by increasing manufacturing efficiency and production capacity.
Bring production closer to home with tailored financing and expert guidance
While the threat of supply chain disruptions may linger, manufacturing firms are still in the driver’s seat when it comes to safeguarding their operations. With customized lending solutions and experts in the manufacturing industry, First American Bank is ready to create tailored financing to help manufacturers expand their domestic operations—without added strain on bottom lines or stress on management.
Our team understands the opportunities and complexities that reshoring presents, and have numerous options to help manufacturers of all sizes meet their growth goals and stabilize supply lines, including:
● Equipment financing
● Working capital lines of credit
● Industrial revenue bond financing
