Presented with the opportunity to slash operating costs and increase profit margins, many companies moved their US-based manufacturing facilities overseas. In 1965, manufacturing made up 53% of the American economy. In contrast, by 2004, that percentage had plummeted to just 9%. This decades-long practice has begun to lose its appeal as manufacturers discover the advantages of bringing their manufacturing back to the USA.
The cost advantages of manufacturing in foreign countries have begun to wane in recent years. With issues like unstable supply chains, shipping delays, and inferior product quality, more and more manufacturers are looking to move their manufacturing operations back to the United States, a trend often referred to as reshoring.
Returning operations back to the USA helps to resolve these issues, and additional incentives are available. From favorable tax benefits to accessing more advanced technology, there are many reasons to consider reshoring. Read on to learn the most significant advantages of bringing manufacturing back to the United States.
It Creates Jobs for Americans
Perhaps the most obvious – and most important – advantage of choosing US-based manufacturers is that it provides jobs for Americans. Employing Americans stimulates the economy at the local and national levels. Families that are stable or thriving financially are more likely to spend more money, helping boost sales for US-based companies.
Manufacturing jobs are highly desirable because they boast the highest wages for industrial workers. A U.S. Bureau of Labor Statistics report reported that employees working for a manufacturer brought home an average of $10,000 more per year than employees working in other popular working-class sectors, such as healthcare or teaching.
It isn’t just creating internal jobs: ancillary workers will also see a boost in job openings. Many people are in the chain between manufacturers and consumers, from truck drivers to warehouse workers. And they all benefit from US-based manufacturing facilities.
Another point worth considering is that US-based manufacturing provides essential value to consumers. Many consumers are increasingly focused on buying American-made products when they can, as they value companies putting money back into our economy by employing our citizens.
It Reduces Delivery Costs
While locating manufacturing facilities in foreign countries may result in lower production and labor costs, not all expenses are low as thought. There are several logistical hurdles to getting products made overseas to U.S. customers. Due to the complexities of the recent pandemic, recent hikes in shipping and delivery costs are only continuing to rise.
Keeping your manufacturing in the U.S. means you’ll see significant savings on inbound and outbound shipping costs. Domestic shipping has the advantage of various transportation mode options and broader shipping windows. You’ll also see a reduction in costs associated with human error, which are often unavoidable when working around language barriers, differing currencies, and the like.
Though we touched on this above, it is essential to note that using U.S. shipping providers contribute to the overall economy. You’ll also eliminate or significantly reduce the costs associated with international shipping, including insurance, fuel costs, international taxes, customs fees, and import/export fees. Lower shipping costs mean less overhead, lower price points, and an increase in customers who will remain loyal to your company and make repeat purchases.
It Means Shorter Lead Times for Customers
Significant monetary savings on logistics isn’t the only benefit you can expect: manufacturing in the U.S. will also save you valuable time during production. Your goods will have less distance to travel to distributors or retailers, thus reaching the customer more quickly. This means speeding up your sales process, improving the accuracy of forecasts, and getting profits into your bank account sooner.
In today’s digital age, customers expect products to be delivered to their door within concise time frames. (Often called the Amazon Effect due to their Prime 2-day shipping pervasiveness.) Making your products in the U.S. means they don’t have to travel as far to reach consumers; this means lower shipping costs and timely delivery.
To meet the instant gratification demands of today’s consumers, companies relying on overseas-based manufacturers are often forced to keep large stores of inventory in US-based warehouses. Not only does this mean incurring extra expenses to house and maintain that inventory, but it also leaves you at risk of having too much product on hand for demand, which must then be destroyed at a loss. Relying instead on a manufacturer in the U.S. means your company is better able to change production to meet unexpected shifts in demand and market sentiment.
It Makes Your Business More Environmentally Friendly
Reducing your transport and delivery demand doesn’t just save you money – it’s also good for the environment. Today’s customers are becoming increasingly interested in supporting companies that work to reduce their carbon footprint. Shipping via ocean liners is one of the most significant contributors to greenhouse gas emissions; by no longer needing such extensive international shipping options, you’ll no longer be contributing as much to our emissions problems.
US-based companies are often more desirable for customers concerned about environmental impact. Some foreign countries have inadequate or zero regulations about severe problems with manufacturing, such as waste dumping, water contamination, emissions, and the like. Customers prefer to support companies that work with manufacturers in the U.S. because any claims they make about being eco-conscious can be vetted and supported.
You Can Achieve a Higher Standard of Safety & Quality Control
Having your products manufactured close to home makes sense if you’re an American company. Instead of having to take an international flight to check on your products, depending on your location, it may be as simple as a car ride and certainly no worse than a simple domestic flight. Being able to check on your product means you can have greater control over the quality of every item, enticing customers with a higher quality product than your competitors who still rely on overseas manufacturing facilities. And anytime a problem arises, you’ll be able to address it quickly, saving your company valuable time and money.
In addition, U.S. manufacturing facilities must follow strict safety guidelines, ensuring their workers are protected against dangerous accidents and injuries. This is rarely the case in many countries overseas, which leads to worker injuries and the costs associated with handling them.
Still Not Convinced? Big Companies are Moving to Domestic Manufacturing
While you might not yet be convinced that it’s time to take the plunge into returning your manufacturing to the United States, you may be surprised to learn that some massive companies are already moving in that direction. Leading U.S. companies such as Ford, Whirlpool, and General Electric have already begun to see the benefits of reshoring and investing money into bringing manufacturing back to the U.S. Moreover, A recent study found that over half of the executives heading US-based businesses that make over $ 1 million in annual sales are either already investing in reshoring or plan on doing so within the next five years.
Investing in moving your manufacturing operations back to the U.S. has the genuine possibility of transforming your business. With the significant savings you’ll see in logistical costs and the public relations benefits of providing jobs to U.S. workers, you’re sure to see a return on any investment you make to finalize a move to U.S. manufacturing.
At dominisii.com, we’re proud of our efforts to help companies produce items right here in the United States. Contact us today to learn more about our commitment to global responsibility and our drive for innovative opportunities for sustainable manufacturing practices to help drive your business forward and ultimately increase your bottom line.
