Top 20 Reasons for Reshoring
A growing number of U.S. manufacturers — including Apple, Caterpillar, GE, Ford and Google — are choosing to manufacture more in America. Reshoring is on the rise and for good reason.
As companies review total cost data, they are finding that rising offshore labor rates, plus the hidden costs of counterfeit and unreliable quality, counter the low unit costs promised when an OEM first considered outsourcing to Asia.
Offshoring vs. Reshoring
Offshoring costs such as quality, warranty and rework ranked second among the top reasons for companies reshoring their manufacturing. The table above represents the top 20 reasons for OEM’s reshoring based on the number of cases cited for each reason.
These reasons illustrate that industry is starting to see the erosion of the Chinese cost advantages. To help make their case stronger, CFOs have been using total cost of ownership (TCO) analysis to quantify the true costs and benefits of offshoring.
The table below provides examples of OEM companies that have calculated their TCO and concluded their offshoring costs outweigh their advantages.
Reshoring more parts and assembly processes can reduce concerns due to hidden costs and unreliable quality.
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