WHAT IS RESHORING IN MANUFACTURING?
Discover the benefits of reshoring manufacturing in Mexico vs China and how it can optimize your supply chain. Learn more at ibconnections.com.
The definition of reshoring is the process of bringing back manufacturing from overseas or offshore locations. In effect, bringing it back to your shores. Reshoring is the opposite of offshoring which means moving your manufacturing “off your shores,” most typically to overseas locations like China.
Nearshoring is another supply chain strategy that involves bringing manufacturing back from offshore to shores nearer to your market or home base, with Mexico being the top destination for U.S. manufacturing companies. Nearshoring and reshoring are often used interchangeably when discussing long-term planning and expansions of your production to meet your supply chain goals.
What are the Benefits of Reshoring?
The reshoring benefits for manufacturing are numerous; from reducing time in transit and shipping costs to building a resilient supply chain by getting closer to your final market. Even prior to the surge of the industrial reshoring initiative, manufacturing in Mexico offers your company the cost and location benefits not available anywhere in the world. The benefits of reshoring to nearshore Mexico versus China:
- Lower labor costs for highly skilled workers versus China
- Proximity to U.S. and North American markets
- Reduced time in transit
- Lower shipping costs
- Better work-life cultural alignment
To learn more about the benefits of reshoring manufacturing in Mexico versus China, see our updated article: Manufacturing Companies Leaving China for Mexico.
U.S.-China Trade War Spurs Reshoring Trend
Reshoring manufacturing is a strategy that has increased in popularity during the years 2019 and 2020 due to increased risks of having facilities so far away, unpredictable tariffs, and the U.S.-China trade war. In the past, reshoring was defined as strictly a return to the United States. That has changed. Let’s take a look at Deloitte’s definition from the, Footprint 2020: Expansion and Optimization Approaches for U.S. Manufacturers.
Deloitte explains that, “a lot of optimism has emerged surrounding the US manufacturing renaissance, fueled by the concept of reshoring. While reshoring is a real phenomenon; a common misconception is it represents a return of previously offshored operations to US soil. In practicality, reshoring may include returning operations to Mexico. This offers greater access to the US market but allows companies to maintain advantageous operating cost structures.”
In this same Deloitte report, the authors additionally note, “Sixty-six percent of survey respondents offshored their operations in the past 20 years, and a third are now considering bringing them back to North America. These moves focus on primary production and assembly operations currently located in China, India, and/or Brazil. Mexico is the first-choice destination to re-shore operations, followed by the US.”
What does it take to reshore manufacturing successfully?
When looking to reshore manufacturing, your expansion and site selection teams can benefit by working with shelter companies in Mexico like International Business Connections. Think of them as your experts on the ground that will assist you with every step of the process. The Mexico shelter manufacturing partnership is a proven strategy for getting up and running in less time, for less costs, and with minimal risk and exposure.
Shelter companies in Mexico like IBC can help you run cost analyses for reshoring to Mexico that include labor costs, start-up costs, and overhead costs for your new manufacturing plant. Whether or not you are interested in outsourcing, contract manufacturing, or opening your facility – IBC has the know-how and know-who to help you make the right decisions for your reshoring and expansion projects.
There are thousands of manufacturing companies in Mexico in all major industries such as Aerospace, Automotive, Electronics, Medical Device, Metal manufacturing, Furniture manufacturing, and more. Mexico manufacturing is robust, mature, and capable of handling every product and process under the sun.