Clients mirror recent trends to bring business back to American shores.
For the past several years, there has been a great deal of excitement with emerging markets of the world, such as Brazil, Russia, India and China, because that is where the expanded production and consumption is. Many companies moved their manufacturing or outsourced it to Asia in particular over the last several years. More recently, however, there’s been a shift; more and more American businesses are “onshoring” or “backshoring,” meaning bringing their manufacturing back to the U.S. This is primarily due to: 1) an increase in the cost of manufacturing in China (although still less expensive than in the states) and 2) an effort to avoid long supply chains and burdensome shipping costs in transporting goods back to the U.S.
Several ASLON clients demonstrate similar changes in strategy. A century-old, family-owned business, which has been acquiring companies globally over the last few years, has implemented a world-wide strategy to support local economies with local management and local manufacturing where they do business, versus offshoring. Another client, which went international in the 1950s, still sells world wide, but has brought its manufacturing back to the U.S. because of a surplus in manufacturing capacity and more moderate costs in labor and materials in the post recession.
A third client, a family-run organization founded in the 1930s, which manufactures one particular product, has decided not to automate, outsource, or offshore. They have purposely kept production completely hand-labor in their own manufacturing plant. They will not compromise the quality and the proprietary nature of their products or their formula for success that may be at risk in distant lands.
Another key advantage of onshoring is to keep entrepreneurship and innovation strong. The process of innovation gets disrupted and lost when designing and building products on the other side of the world. In fact, many companies have built their research and development centers in Asia to be close to their manufacturing facilities. Companies and CEOs should be cautious about interrupting the links in innovation. That’s one area where we can stay ahead of the world. People still look to America for new ideas.