Resiliency concerns revealed by the COVID-19 pandemic are driving companies to embrace sustainable manufacturing for post-pandemic supply chains. Supply-chain sustainability is the management of environmental, social and economic impacts. Reshoring checks all of the sustainability boxes since it reduces environmental impact, has a positive societal effect and stimulates economic activity. Reshoring is a game-changer for driving sustainability.

Environmental Impact

Offshoring’s impact on the world environment has been significant. Developing countries have higher carbon emissions due to more coal-intense electricity generation and other pollution. Companies in-crease world pollution by offshoring production to less-regulated countries and then importing those products back into the United States, adding the impact of long-distance transport. As noted in a report from CDP Worldwide, “Supply chains are responsible for up to four times the greenhouse-gas emissions of a company’s direct operations.”

Some businesses are prioritizing sustainability right now. A recent Oxford Economics study found that half of respondents said their companies have already reduced overall shipping miles, and SAP research revealed that 68% of companies surveyed have reduced energy consumption. Shifting to a local-for-local business model will reduce CO₂ levels and energy consumption while achieving higher environmental standards sooner. U.S. manufacturing is the greener choice.

Societal Impact

Pandemic-driven shipping bottlenecks, shortages, higher prices and long delays are having a negative impact on American consumers. An Oracle study of 1,000 U.S. consumers found that companies that do not prioritize resilient supply chains risk seeing declines in customer loyalty and revenue. Consumers are willing to pay a premium for timely delivery (81%), and delays/shortages would cause them to cancel orders (84%) or terminate brand purchases entirely (80%). Reshoring enables risk mitigation and faster time to market.

Economic Impact

The Oxford Economics study also found that 88% of businesses surveyed are prioritizing sustainable manufacturing to increase efficiency and reduce costs. Accelerated reshoring will promote national economic sustainability by adding more well-paying jobs, reducing risk and increasing individual and corporate taxes paid. Manufacturing also has the highest multiplier effect among the major sectors.

Regionalization and More-Resilient Supply Chains

In a recent Yahoo News interview, Barbara Humpton, Siemens USA CEO, discussed how regionalizing manufacturing could ease supply-chain bottlenecks. Humpton said, “We have been in a couple of decades of globalization. […] But what we absolutely need is the ability to make products close to the source of demand. And so this regionalization of manufacturing is actually going to help make our supply chains more resilient.”

Today’s New Normal

Sweden-based Sandvik Coromant, a cutting-tool manufacturer, opened a 167,000-square-foot manufacturing facility in North Carolina in 2021. Helen Blomqvist, company president, called sustainability “the core of (Sandvik’s) strategy.” Sandvik’s commitment to sustainability includes a promise to recycle 90% of all materials and reduce its carbon emissions by 50% by 2030. The new facility will employ 170 workers.

Time to Re-evaluate

Now is an especially good time for companies to re-evaluate the choice of domestic versus offshore production and the resulting impact on sustainability. The Reshoring Initiative® website (www.reshorenow.org) provides tools to help companies decide objectively whether their overhead will come down more than their manufacturing cost goes up when sourcing locally. For help, email harry.moser@reshorenow.org.

Harry Moser

Founder/President

Reshoring Initiative®

847-867-1144 

harry.moser@reshorenow.org