Brands in the US decided to offset manufacturing to other countries based on several factors such as cost, volume, and labor. Although such a decision led to higher profits, over time, customers began noticing the absence of “Made in the USA” on the products they adore.
Offshore manufacturing is primarily a model that companies adopt to cut costs. However, this approach often comes at the expense of quality. However, with the advancements in automation and robotics technologies, the USA has again become a viable option to manufacture quality products.
Let’s explore why American businesses are returning to the US for manufacturing and the impact this shift is bringing to our country.
The Need for “USA Made Products”
Moving manufacturing to offshore plants in countries like China cut down manufacturing costs but loomed with a cloud of questions about quality. At the same time, products manufactured in-house on US soil may cost more but offers both producers and customers more satisfaction and higher quality.
That is why brands like Apple decided to invest $30 billion in capital expenditures in the US over the next five years. This capital is targeted to boost the manufacturing capabilities in the US and boost the domestic manufacturing sector from $1 billion to $5 billion in valuation. In addition, this move would generate 22,200 more jobs in the US.
The Logistics Complexity with Offshore Manufacturing
One of the significant risks of having an offshore manufacturing unit is the actual logistics. Getting the products manufactured in a different country adds a lot of middle management.
Even after the product has been made to the exact requirements, there comes the task of shipping everything to the US. The pandemic showed how frail the supply chain system is and its effects when companies could not source their parts at the right time.
For example, the chip shortage alone cost the global automotive industry $210 billion in revenue in 2021. Computer processor giants like AMD are booking parts for months and years to mitigate losses and keep shelves packed.
Onshore Manufacturing Ensures Tighter Control Over Quality and Production
Manufacturing locally in the US enables American businesses to gain tighter control over the product’s quality. QA/QC testing within USA manufacturing plants allows companies to create products at par with international specifications.
Companies will also have the advantage of choosing a skilled workforce for each production process. Moreover, since the goods require less distance to travel to get to distributors, retailers, or end-customers, businesses can significantly reduce the production lead time and bring their products to market faster.
Overall, manufacturing in the United States allows homegrown brands to oversee every single process to ensure the quality and consistency of their products and deliver a great experience to their loyal customers.
Bringing Back Manufacturing to the United States
With leading US-based companies like Boeing, GM, and Ford moving towards USA manufacturing, more companies follow suit. With the recent pandemic disrupting the supply chains, US brands have realized that certain events can topple their production goals and profits if they do not have control over their parts and processes.
With the US government putting more efforts to bring back manufacturing to the US, more American businesses are likely to become less dependent on offshore manufacturing and instead enhance their manufacturing capabilities in the US over the coming years.