Reshoring: What Manufacturers Should Know
Guest blog from IMEC, by Jordyn ShawhanThere is a lot of conversation right now about reshoring, but not about its relevance to small and medium-sized manufacturing firms. The basic premise of reshoring is easy to understand – bring jobs back to America by encouraging companies currently offshoring to “reshore” and purchase labor or materials from a U.S. firm. This in turn benefits the local economy and stabilizes the buyers’ supply chain by not relying on overseas partners. However, if you’re a manufacturer who does not order supplies from – or work with - companies overseas, why should you care about this trend? Well, reshoring is an opportunity for many manufacturers to grow their sales channels, and we have found that most are not taking advantage of this avenue to grow their business by increasing sales, creating jobs, maximizing their capacity, and become more competitive. Gain more domestic business and build global competitiveness.
Though recent months have made the benefits of reshoring more apparent, the push to reshore is not new. For example, the Reshoring Initiative has had a decade of success bringing business back to the United States. As of June 2020, they have calculated that 955,000 jobs have been brought back to the U.S. due to reshoring.
Not only does this benefit the country, but it gives you a competitive advantage as well! As more companies start doing business in the states again, they will need to replace parts previously purchased from overseas. Illinois manufacturers already create these components, or they have the capability to begin creating them.
For OEMs, doing business domestically has become more attractive now. For years, offshoring was a trend among businesses looking to save on overhead. Now, recent events have given a wake-up call to many who are realizing that the risks associated with supply chain disruptions, outweighs the offshoring price tag.
You can increase sales by appealing to these companies who currently or previously purchased products from overseas. You will need to identify potential buyers who could be purchasing the same parts from you instead and trained on how to explain the benefits of reshoring to those buyers.
You Don’t Have to go at it Alone.
This year, in partnership with the Reshoring Initiative’s Import Substitution Program, IMEC created the Premier Domestic Manufacturing Program to help Illinois’ small and medium-sized manufacturers like you gain more domestic businesses from OEMs who are importing.
A Technical Specialist will meet with each participating company to understand their products and their capacity. Then together with the Reshoring Initiative, create a custom list of potential buyers and the products they currently purchase for each manufacturer. This list gives each participating firm the opportunity to appeal to new buyers and grow their annual sales revenue.
Estimate the Cost of Doing Business Overseas vs. Doing Business in America.
If you’re already working with an offshorer to potentially produce components as substitutes for their imported products, resources are also available for you. The Total Cost of Ownership Estimator (TCO Estimator) is a free tool you can use to show the company the true cost for them to offshore.
The TCO Estimator calculates your overhead, balance sheet, risks, corporate strategy, and other external and internal business considerations. This provides an accurate estimate for offshoring because it is based on your company’s unique data and the estimator is flexible. Also, did we mention it is completely free to use?
Ready to bring business back to Illinois and improve your bottom line?
Learn more about IMEC’s Premier Domestic Manufacturing Program!- - -