The New Re-Shoring Trend: Think Globally, Act Regionally

Over the past 10 years, the manufacturing industry has expanded globally as brands outsourced their manufacturing needs and assembly to far-shore but low-cost, developing countries. But now, there’s a new production movement afoot, according to a report by the Massachusetts Institute of Technology Forum for Supply Chain Innovation.

The new business paradigm urges manufacturers to: Think globally, act regionally.

“We are in the middle of a transformation from a global manufacturing strategy, where the focus is on low-cost countries, to a more regional strategy, where China is for China and perhaps other emerging markets, U.S. (or Mexico and Latin America) is for the Americas, and Eastern Europe is for European markets,” concludes Professor David Simchi-Levi, founder of the MIT Forum.

Simchi-Levi surveyed 340 companies concerning their location plans for the future. An impressive 49% of U.S. manufacturing companies said they were considering re-shoring jobs, the MIT Forum reports in “U.S. Re-shoring: A Turning Point.”

The companies’ top reasons for relocating their operations were:

  • Time-to-Market (73.7%)
  • Cost Reductions (63.9%)
  • Product Quality (62.2%)
  • More Control (56.8%)

Given the high cost of oil and transportation, U.S. manufacturers hoping to expedite their time to market would be well-served to look to Mexico for their manufacturing and delivery needs. Cross-border fees between Mexico and the U.S. are low, allowing companies to ship freight back and forth relatively inexpensively. Short assembly and shipping times (less than a week) also mean greater flexibility for manufacturers who require quick turnaround or need to meet rapidly changing market trends.

Cost reductions can also be found in Mexico’s affordable workforce (approximately $5.20 USD/day per worker vs. $22.50 an hour, including $4.50 in benefits, for U.S. workers). While product quality in Mexico is among the best in the world.

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