Bringing Electronics Back

The Move Toward Reshoring
Written by Robert Hoshowsky

For decades, one of the biggest buzzwords in manufacturing was offshoring – having work done in another country.

Since the production of goods is often more expensive in North America, companies take advantage of lower labour costs by moving their manufacturing facilities for electronics, clothing, furniture, and other consumer goods – along with information technology development – to countries where costs are significantly lower, then shipping products and technology back to the west. Over the years, some of the biggest nations for offshoring have included China, the Philippines, Vietnam, Malaysia, Indonesia, Ukraine, Poland, and Brazil.

There are distinct advantages for large corporations from offshoring, ranging from lower expenses to tapping into a massive and available talent pool such as experienced technology staff in India. Yet offshoring has plenty of detractors from the government to consumers willing to pay more for Made in USA products and services.

Some in favour of offshoring argue cheaper production of goods in other countries leads to lower prices in the west, creating valuable jobs in poorer places; others believe offshoring directly contributes to job losses in the United States and Canada and takes advantage of workers in other countries, who may or may not be protected on the job, working in crowded and sometimes dangerous factories, operating unsafe machinery and forced to work overtime for very little extra pay, if any.

On the opposite side of offshoring is reshoring – also known as inshoring, onshoring, or backshoring – referring to returning manufacturing and production back to the country of origin. The reasons for reshoring are many, including improving quality control over manufacturing and production, the rising cost of shipping goods back to North America from other countries, and the steady increase in labour costs in countries such as China, where the lower class is rapidly being replaced by the middle class. Other key factors manufacturers using the move to improve public perception.

The push for reshoring spiked after the Great Recession of 2008 led to then-President Barack Obama’s administration promoting reshoring efforts. Bringing manufacturing back to the U.S. strengthens the economy, creates well-paying jobs, and ensures a skilled workforce for the future. Quality often improves, since products are inspected by qualified staff at home rather than abroad. If there are any production issues, they can be dealt with quickly, instead of taking weeks or months which can happen when companies are operating in facilities thousands of miles away. Companies that reshore are better able to optimize their supply chains, so they can still sell products at a reasonable price and make a profit.

One of the industries spearheading reshoring is electronics manufacturing. Other businesses like automakers and aviation are also steadily coming back to America. According to The Reshoring Initiative which describes itself as “the leading voice in making the case to companies that it is often in their interest to bring manufacturing jobs back to the United States or keep existing jobs here,” reasons for reshoring include “a true understanding of the total cost of ownership (TC),” along with quality issues, language differences, and the sometimes nightmarish logistics involved when dealing with factories in foreign countries. The organization claims that reshoring has brought back hundreds of thousands of well-paying jobs to the U.S. over a six-year period.

Apple has reshored tens of thousands of jobs, and many of us think of larger companies leading the way but electronics manufacturers big and small are also bringing employment back to the U.S. and Canada. These include South Carolina-based Element Electronics, which brought back production from China to Winnsboro, South Carolina and opened a flatscreen factory in Detroit.

Solar energy services company and Tesla subsidiary SolarCity has committed $5 billion in exchange for a construction subsidiary for a facility in Buffalo, New York, which itself will create about 1,900 jobs. Whirlpool, General Electric, semiconductor technology company Intel Corporation, and others have also followed suit, bringing work to Ohio, Michigan, and California.

Reshoring is just one way that electronics manufacturing is changing with the times. These companies are also optimizing operations by selling directly to consumers. In a drastic shift from the business-to-business (B2B) model, business-to-business-to-consumer (B2B2C) enables manufacturers to exercise greater control over prices and brand messaging. Additionally, more companies are taking advantage of ‘big data,’ gleaning and extracting masses of information which is then analyzed to make better business decisions.

Complemented by the internet of things (IoT), three-dimensional (3D) printing, and other recent technological innovations, the world is growing digitally, affecting supply chain networks. As demand for consumer devices like smartphones grows, the digital supply chain (DSC) that delivers digital media like video or music will play a vital role for electronics manufacturers after growing from almost nothing to worldwide prominence in the past two decades.

Many cannot remember the last time they purchased physical media such as CD-ROMs or DVDs, choosing instead of receive information through the digital supply chain by downloading files over the internet. And with cloud computing allowing for the storage and sharing of information virtually anywhere, manufacturers – like consumers themselves – will continue using on-demand information to improve their businesses.

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