Confidence about manufacturing in China has plummeted to a new low. Almost twice as many U.S. companies cut their investment in China in 2022 (19%) versus 2021 (10%). “Confidence has been shaken,” according to the 2022 China Business Report conducted by the American Chamber of Commerce in Shanghai (AmCham Shanghai) and PwC.
Shifting forces continue to drive reshoring higher, providing incentives for companies to produce at home. Supply-chain gaps and the need for greater self-sufficiency continue to be major factors driving reshoring. Destabilizing geopolitical and climate forces have exposed our vulnerabilities and the need to address them. Consequently, great opportunities have emerged for an enduring and meaningful rebound of U.S. manufacturing.
United States manufacturing is at a critical juncture. Russia’s invasion of Ukraine, the sanctions imposed for doing so and new pandemic-induced shutdowns in China are adding to the pain of already distressed global supply chains.
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.
Since 2010, more than 4,700 companies have brought back some or all of their manufacturing operations and sourcing to the United States. Despite COVID-19, reshoring set a new record in 2020. The job total for 2020 is 109,000 for reshoring and 51,000 for foreign direct investment (FDI), which brings the total to over 1 million U.S. manufacturing jobs added from offshore since 2010.
Hard lessons learned from the 2020 pandemic taught us that we needed to rebuild and re-establish our U.S. supply-chain ecosystem. The systemic shock to our global supply chains left us with bottlenecks, shortages and an acute awareness of our overdependence on imports.
My last column was a brief introduction to the Reshoring Initiative’s resources and some best practices regarding what companies can do to accelerate reshoring to gain business. Now we would like to discuss in more detail how your company or your customers can use the free online Total Cost of Ownership (TCO) Estimator® to more accurately determine the real P&L impact of reshoring or offshoring. Doing so will probably prove that some work should come back.