Offshoring was the big news for many years. Then there was talk of reshoring, the process of bringing manufacturing back to the United States. For several years we heard that the Great Reshoring was just around the corner…Then came the pandemic, with supply chain fiascos that still are disrupting manufacturing across the country.
Reshoring looks like a reality now.
Onshoring
“Onshoring” is another word for “restoring.” If offshoring means sending production overseas, then onshoring by extension would be the opposite: bringing production back home.
Sometimes this term is used to describe sourcing and production taking place in the United States without the implication of having done offshoring first. A company that builds a factory in Wyoming could be said to be onshoring even if they never had a factory in Bangladesh.
Reshoring
Reshoring is about moving processes back to the U.S. Many companies that offshored production in the 1980s are finding that a shorter supply chain makes more sense. As other nations increase wages and U.S. plants increase automation, the cost savings of offshoring are disappearing.
Concerns about dependence on specific countries became high priorities during the pandemic, when companies that relied on an offshore supplier sometimes found themselves unable to complete their work for want of a single element of their supply chain. Transportation disruptions and rising fuel costs have also made restoring more appealing for U.S. companies.
Nearshoring
“Nearshoring” is used to describe offshoring in nearby countries. For example, a U.S. company could be said to be nearshoring if they have a plant in Mexico or Canada rather than in China or Bangladesh. It’s more often used for outsourcing some tasks than for building a manufacturing plant, however.
The term actually makes more sense in Europe than in the U.S. For a company in Connecticut to outsource some tasks to a company in North Carolina, which may have lower costs, makes sense. That’s about the same as a company in the Netherlands choosing to outsource to a company in Poland.
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