What is Reshoring?

Reshoring, also referred to as back shoring, insourcing and onshoring, is the practice of returning offshored products and assets back to the location from which they were originally offshored or removed. Reshoring in general, means returning offshored products and assets back to the U.S. It can also refer to bringing back to the U.S. the manufacture of products that will be sold or assembled here.

Reshoring is a supply chain strategy based on real economic forces. It is also a growing trend as more and more companies strategically shift their supply chain models to take advantage of the benefits of manufacturing here in the U.S.

Why Reshore?

There are several reasons why over 20% of manufacturers are actively engaged in reshoring. These include the need to reduce total costs and lead time to markets, improve quality and brand image, and gain access to a skilled workforce. In addition, wage inflation makes it more costly to produce and source overseas, especially in China. Competition for labor and minimum pay rate increases in China are considerably narrowing China’s direct cost advantage, currently estimated at less than 5%. In addition, producing and sourcing overseas leads to overproduction of inventory and intellectual property and supply chain risks.

Why Reshore to Pennsylvania?

Pennsylvania is built to advance and should be your number one choice for reshoring. Pennsylvania is located at the center of the largest shale play in the U.S., and is home to the second largest energy field in the world. We are quickly becoming one of the most energy efficient production regions. Our strategic location is within a day’s drive of six out of 10 major U.S. markets, as well as 60% of the U.S. population and purchasing power and 60% of the Canadian population. We have more than 5,000 miles of active rail line, six international airports and three ports providing access to the Atlantic Ocean, the Great Lakes, and the Gulf of Mexico.

Pennsylvania has a critical mass of skilled workers totaling 6.4 million across industry sectors and functions, as well as a healthy supply of new graduates. We are home to more than 270 universities, two-year colleges and trade schools which can provide you with effective access to state-of-the art research centers and the next generation of workers.

If you are reshoring your business, Pennsylvania is the place to be.

How do I decide if reshoring makes good business sense for my company?

The decision of where to locate and source manufacturing is often determined by costing methods that are not accurately capturing the true costs of offshore production or sourcing. For example, many product costs such as travel for auditing, inventory carrying costs, obsolete inventory, and those associated with the loss of intellectual property, are often overlooked in sourcing decisions which can lead to underestimating product costs by as much as 20%. Companies can make better sourcing decisions by analyzing all product costs with a Total Cost of Ownership (TCO) analysis. A TCO analysis helps companies identify, calculate, and compare all of the product costs, risks and strategic impacts of their sourcing decisions. Increasingly, companies that make their sourcing decisions using the Total Cost of Ownership analysis find that —”coming home to Pennsylvania” —is the best choice.

Pennsylvania manufacturers can receive a TCO analysis at NO-COST for items produced or sourced offshore. To schedule a TCO analysis for your company or for more information, contact reshore2pa@nepirc.com.

Make the Total Cost of Ownership analysis the key element in your sourcing decisions!