The U.S. economy entered 2020 in the midst of a historic 128-month expansion. Unfortunately, the coronavirus pandemic struck in March, plunging America into an economic crisis. Downsizing and layoffs continue to skyrocket and, according to the U.S. Bureau of Labor Statistics, 12.6 million people are currently unemployed and the World Bank forecasts the economy will contract a full 6.1% this year. It appears now is the perfect time to demonstrate the value of reshoring as a manufacturing initiative.
Though the recent news on Covid vaccines is promising, uncertainty surrounding the distribution, allocation, and availability will likely factor into the overall economic recovery. A complete “return to normalcy” time frame remains to be seen, with some experts predicting 12-26 months from now.
So, is there a silver lining to speak of? While many Americans are in dire financial straits, countless workers in the manufacturing sector could see an increased workload thanks to renewed, and bolstered reshoring efforts. Although overall economic activity remains constrained, reshoring seems destined to galvanize companies in the manufacturing industry.
Reshoring to the Rescue
Reshoring, defined by Investopedia as “the process of returning the production and manufacturing of goods back to the company’s original country,” can, among other advantages, 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. Moreover, with fraying relations between the U.S. and China, an ever-increasing number of Americans want domestically-made goods.
[Re]Shoring Up the Economy
As noted in a recent essay from the Brookings Institute, reshoring as an initiative has many additional benefits: “[Reshoring] can help balance trade and budget deficits, reduce unemployment by creating well-paying manufacturing jobs, and develop a skilled workforce. Reshoring also benefits manufacturing companies by potentially reducing the total cost of their products, improving balance sheets, and making product innovations more effective.”
Now, who wouldn’t want these beneficial outcomes?
Policies and Programs
For reshoring to catch on, we need real activation at both the federal and local level. Legislation designed to offer guaranteed contracting bids, opportunity zones, and economic grants will be required assets. The manufacturing industry is hungry—starving in fact—for incentivization to drive adoption and trial for reshoring initiatives.
The incoming Biden Administration is likely to intertwine efforts to fight the pandemic and oversee an economic recovery plan. While predicting the upcoming weeks and months is impossible, reshoring could play a critical role in strengthening the economy and helping it rebound. If we can seize upon this opportunity and move past the slogans into direct action, reshoring may spread across the U.S.