After the Great Recession, America’s economy rebounded during a record phase of expansion that lasted 128 consecutive months. As a leading metal manufacturer serving Denver and the front range, Metalcraft was fortunate to experience annual growth year over year during this time. In the uncertain time prior to this economic recovery, we had to change our focus and adapt to the circumstances. We shifted a lot of time and effort into the pursuit of new projects. We discussed how technologies, such as 5G Wireless and digitalization, would play a role in growing our customer base.
Here We Go Again
Unfortunately, the coronavirus pandemic caused the U.S. economy to plunge into another recession this past February. According to the Bureau of Labor Statistics, 12.6 million people are currently unemployed and the World Bank forecasts that the economy will contract 6.1 percent this year. Moreover, legions of financial analysts predict that this recession will be the most challenging for advanced economies since the Second World War. World Bank Group Vice-President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu, is on the record as stating:
“This is a deeply sobering outlook, with the crisis likely to leave long-lasting scars and pose major global challenges. Our first order of business is to address the global health and economic emergency. Beyond that, the global community must unite to find ways to rebuild as robust a recovery as possible to prevent more people from falling into poverty and unemployment.”
What Is Reshoring?
One of the manufacturing industry’s best solutions for creating “…as robust a recovery as possible” is to encourage and support the practice of reshoring. Investopedia defines reshoring as “the process of returning the production and manufacturing of goods back to the company’s original country.” Among other benefits, reshoring can minimize regulatory compliance risks, significantly reduce delivery and distribution costs, lower unemployment rates, improve product quality, and create a more effective and resilient supply chain. Even before the COVID-19 outbreak, many economists and academics argued that America was excessively reliant on foreign manufacturers, particularly China, for far too many vital products.
The nonprofit organization Reshoring Initiative is the leading proponent for the practice of bringing good, well-paying manufacturing jobs back to the United States. It’s worth a look for researching and supporting this idea from a value-proposition perspective.
The Downside to Outsourcing
A report from a manufacturing industry think tank entitled, “Invent Here, Manufacture There,” includes an important passage that reshoring could solve:
“Outsourcing production over multiple decades has left the country without the means or ability to innovate, let alone produce, the next generation of high-technology products. The country has lost suppliers, skilled trades, and the product and process design and engineering knowledge that can only be built and renewed through hands-on production.”
Reshoring. An Idea Whose Time Has Come
Thomas Publishing conducted a survey in June that revealed that 69% of respondents from the manufacturing industry were “likely” to “extremely likely” to reshore. Similarly, Bank of America researchers contend that the ongoing pandemic, U.S-China trade war, and rising levels of environmental awareness have made reshoring an inevitable choice.
Metalcraft has kept a keen eye on the reshoring initiative and wholly embraces its mission. It’s always been a practical solution for the manufacturing industry. But now we have a real chance to put our words into action. Will the pandemic recovery spawn a new era of prosperity for the American manufacturing sector?
Next month, we continue with this topic examining that question and delving further into the current trend of reshoring.