The reshoring revolution: dynamics and metrics

Veröffentlicht auf: 15.09.2023

The reshoring revolution: dynamics and metrics

Reshoring, the strategic move to move manufacturing and production back to countries with high labor costs, has become increasingly important in recent years. A key driver of this trend is automation – a transformative force that is reshaping the global manufacturing landscape.

A path to economic renewal

Reshoring, often also called onshoring, is the relocation of production and manufacturing processes to countries where labor costs are relatively high. This represents a significant departure from the offshoring trend, which sought cost advantages by outsourcing to countries with lower labor costs.

What do reshoring companies have in common?

Several factors unite companies that embark on the path of reshoring:

1. Automation Integration
Automation is at the heart of the reshoring movement. Companies are increasingly using automation technologies such as robotics, artificial intelligence and advanced machines to streamline their production processes. These technologies increase efficiency, reduce labor costs and enable high-quality manufacturing in high-wage regions.
As Martin Kaspar aptly points out in his source article: “Automation is a key driver of reshoring.” Companies undertaking reshore work often invest in automation to close the cost gap and remain competitive in countries with high labor costs.

2. Quality Assurance
Reshoring companies value product quality and consistency. Proximity to production facilities allows for better monitoring, faster response to quality issues and the implementation of strict quality control measures.

3. Shorter supply chains
Reshoring shortens supply chains and reduces lead times and transportation costs. Companies can respond more quickly to market demands and adapt to changes, increasing their overall agility.

4. Innovation and Research & Development (R&D)

Proximity to production facilities enables closer collaboration between manufacturing and research and development teams. This promotes innovation, accelerates product development and ensures that products are tailored to local market needs.

5. Sustainability goals
Many reshoring companies attach great importance to sustainability. Automation not only contributes to cost efficiency, but also enables the implementation of environmentally friendly manufacturing processes and compliance with strict environmental regulations.

How to measure reshoring

Measuring the reshoring phenomenon requires a multi-faceted approach that takes into account various economic and operational metrics. The most important key figures include:

1. Employment data

A clear indicator of reshoring is the increase in employment in regions with high labor costs. Tracking manufacturing job creation provides valuable insight into the impact of the reshoring trend on local economies.

2. Investment in automation
The level of investment in automation technologies serves as an indirect measure of reshoring efforts. Companies that actively reshore often devote significant resources to automation in order to remain competitive in high-wage regions.

3. Trade balances
Examining trade balances and import/export data can reveal changes in the flow of goods. A decline in imports and an increase in domestically produced goods could be a sign of reshoring activity.

4. Reshoring Index
Some organizations have developed reshoring indices that assess the reshoring climate in a particular country or region. These indices take into account factors such as labor costs, supply chain stability and government policies.

5. Supply Chain Transparency

Improved supply chain transparency and shorter lead times are qualitative indicators of reshoring. Companies that move their goods onshore often report improved supply chain reliability and responsiveness.

The Reshoring Efforts in the United States:

The United States has seen a revival of manufacturing activity, driven by reshoring and automation. The government has actively promoted reshoring initiatives through incentives and policy support. Job creation, increased investment in automation and a shift in trade balances all point to a growing trend of job relocation in the country.

The shift to countries with high labor costs driven by automation is changing the global manufacturing landscape. Companies that share commonalities such as automation integration, quality assurance, shorter supply chains, innovation and sustainability goals are leading the reshoring effort.

Measuring reshoring includes a holistic evaluation of employment data, investments in automation, trade balances, reshoring indices and improved supply chain visibility. Martin Kaspar emphasizes in his source article: “Reshoring is more than a trend; it is a transformative force for economic renewal.” By using automation and reshoring, companies are not only reshaping their own operations, but also contributing to the revitalization of high labor cost regions and global economic stability.

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