• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Innovative Manufacturers Center

Driving Manufacturing Growth and Job Creation in Central Pennsylvania

(570) 329-3200
  • Careers
  • IMC Blog
  • News
  • Contact Us
  • About Us
    • IMC Service Area
    • IMC Team
    • Success Stories
    • Central PA Manufacturing Companies
    • Partners & Network
    • Career Opportunities
    • Contact Us
  • Services
    • People
      • Brand Development
      • Business Continuity Planning
      • Elevating HR Practices for Manufacturing Success
      • Environmental & Safety Compliance
      • Lean Manufacturing User's Group
      • Manufacturing Business Growth Services
      • Sales Development
      • Tooling U-SME
    • Processes
      • Continuous Improvement
      • International Trade & Export Compliance
      • ISO 9001 Certification
      • ISO Support
      • Lean Manufacturing Level One Certification
      • Lean Manufacturing Transformation
      • Problem Solving with Root Cause Analysis
      • Supply Chain Optimization
    • Technology
      • Clean Energy Manufacturing
      • Digital Marketing & SEO
      • SMART-PA
      • Technology Scouting
      • Website Design
    • Innovation
      • Innovation Engineering Systems
      • Manufacturing Innovation
      • R&D Tax Credits
      • Technology and Innovation
      • Williamsport/Lycoming KIZ
        • About the Williamsport/Lycoming KIZ
        • Do I Qualify for the KIZ?
        • KIZ Tax Credits
        • Williamsport/Lycoming KIZ Benefits
        • Williamsport/Lycoming KIZ Services
  • Events
  • Training
    • People
      • Meeting the HR Challenge
    • Processes
      • ISO 9001 Certification
      • Lean Manufacturing Practitioner Certification
      • Problem Solving with RCA

Why Offshoring May Not be as Cost-effective as it Used to be

image_pdfPrint PDFimage_printPrint

It is no secret that large swaths of the Midwest have seen manufacturing plants shuttered or downsized, but there may still be some light at the end of the tunnel.

(Supply Chain Dive – Rich Weissman: 11-15-16)   Homeshoring, it appears, is becoming more popular as hidden costs outweigh the benefits of sending production out of the country.

But is this trend driven by patriotism or economics?

A recent report from the U.S Bureau of Labor Statistics reveals there are currently about 12.2 million active manufacturing jobs in the United States, with a slight downtick in recent months.

Yet in the past several years, there has been a groundswell of efforts to increase manufacturing in the U.S. by repatriating operations and incentivizing companies to keep production within the country. Count General Electric, Ford, General Motors, Caterpillar and Boeing among the high-profile companies that have returned a portion of their offshore production to the country.

So what drives companies’ decision-making process in this regard?

The hidden costs of offshoring.  Offshoring may help lower the costs of consumer goods, but for the industrial buyer it often represents phantom cost savings. The costs saved can be easily be offset by the amount of time required to chase overseas suppliers, or other logistical challenges.

Supply chain risk is amplified with offshore suppliers; the greater the distance the higher the risk. The recent issues with Hanjin, and continued consolidation in the shipping industry, are just one such example.

In addition, extended supply chains around offshore providers are often opaque, clouding critical communication links. Meanwhile, a globally rising middle class will drive labor rates higher as they demand higher wages and reduce the primary cost advantage critical in the offshoring equation.

Meager economic growth and shifting economic alliances add to the uncertainty. Once companies begin to hedge domestic inventories to mitigate this risk the economics of offshoring worsen.

Harry Moser, founder and president of the Kildeer, Illinois based Reshoring Initiative, a cost of ownership financial model shows many offshoring decisions are not as effective as they first appear. For the most part, economics rule the day.

“Offshoring has been building for 50 years and companies have built their strategies around offshoring, believing that offshore is cheaper,” said Moser.

But looking at the manufacturing pain points of delivery, quality, intellectual property, and inventory position shows a different story, he says.  “Companies need to look at the total cost of ownership when making sourcing decisions.”

Moser, a member of a long-time manufacturing family, claims to have seen dozens of U.S. companies that had been world leaders in machine tools, foundry, equipment, shoe and textile machinery, all idled due to global economics

“Many were not able to compete with offshore competitors due to foreign exchange issues, a poorly skilled workforce, gaps in training, and high corporate tax rates,” said Moser.

A vote for homeshoring.  “Increasing U.S. manufacturing is the key to reducing budget deficits, improving employment, reducing income inequality, and maintaining a strong defense,” said Moser. “By far the easiest, most sustainable way to increase manufacturing is to reshore, to substitute domestic production for imports.”

If a company must remain abroad, though, ‘nearshoring’ – where companies bring production back to North America from Asia – is still better than the alternative.

“It is better for the U.S. economy if production is brought back to Canada or Mexico,” he said, noting the impact of trade agreements like NAFTA. “Getting it closer to the United States is more advantageous than keeping it in Asia.”

The future of U.S. manufacturing may be brighter considering the trends towards advanced manufacturing and its higher value processes, products and wages. But a lack of highly skilled manufacturing professionals is impacting the potential growth in this sector.

According to recent research from Deloitte and The Manufacturing Institute, the U.S. manufacturing sector has a need for 3.5 million manufacturing jobs in the next ten years. Yet, it is forecasted that 2 million will go unfilled due to the skills gap.

A current movement revitalizing vocational training and a recognition that jobs in the manufacturing sector are indeed good ones may help to close this gap in the coming years. This may be the very boost that the homeshoring movement needs.

(Rich Weissman has more than 25 years of experience in all facets of supply chain management. He is past president of the Institute for Supply Management – Greater Boston, and the recipient of the Harry J. Graham Memorial Award, the highest honor bestowed by the Association.)

image_pdfPrint PDFimage_printPrint

Filed Under: IMC Blog, News

Primary Sidebar

Search

Blog Categories

  • IMC Blog
  • News
  • Success Stories

Blog Archives

Testimonials


Northway Industries, Inc.

“Through the Winning Teams program, we increased throughput in our laminate cleaning/inspection area by 18%, which also shortened the time for us to respond to vendors about defective products and t… Read more

Northway Industries, Inc.


Rockland Manufacturing Co.

“We’re very pleased with the results of the training. It was a great way to break the ice regarding a systemic change in one of our oldest and most experience facilities. By training on change man… Read more

Bo PrattPresidentRockland Manufacturing Co.


Pik Rite, Inc.

The IMC and its staff have played an integral part in the success of Pik Rite’s Continuous Improvement culture as well as directly influencing more efficient production and operations. The proof is … Read more

Caleb ThomasProduct Line ManagerPik Rite, Inc.


NuVisions Center

We are a small organization and do not have IT staff. Before we found IMC, the task to implement CMMC seemed almost insurmountable. With their help, the process was no longer overwhelming, and we were… Read more

Terry KnouseVice President of OperationsNuVisions Center


SilcoTek

5 Whys, SIPOC, Value Stream Maps, etc. are great ways to visualize problems that are difficult to pinpoint.

Brandon SmithQuality Control Lead TechnicianSilcoTek


Prysmian Group

The attendees of both training programs came away energized and eager to apply their new skills in training, coaching and communications. There is broad consensus that these skills should continue to … Read more

Jeanette WraggTraining ManagerPrysmian Group


Nittany Paper Mills, Inc.

We make investments where and when our workforce is skilled and ready.  The training was a solid foundation for supervisor development.

Steve PrentissVice President of Human ResourcesNittany Paper Mills, Inc.


QCast Aluminum

The Value Stream Mapping exercise conducted by the IMC enabled us to visually see the overall production process and the areas we needed to target for improvement. Without this process, QCast may not … Read more

Terry ArnoldGeneral ManagerQCast Aluminum


Lang’s Chocolates

IMC’s resource consultant’s background and knowledge were so relevant, and his delivery set a solid foundation upon which we could build for our re-certification as well.

Robert LangOwnerLang’s Chocolates


Metal Integrity

“IMC has been an excellent resource for us to accomplish objectives that we would not have been able to achieve on our own. We would highly recommend any company taking full advantage of the services … Read more

Marc DagataPresidentMetal Integrity




Newsletter Signup

Sign up for IMC’s newsletter to get the latest news on manufacturing in Central Pennsylvania.

"*" indicates required fields

By providing your email, you agree to receive future email correspondence from IMC.

This field is for validation purposes and should be left unchanged.









Upcoming Events



Jun


18


Featured


Featured


9:00 am – 11:00 am


Fundamentals of Maintenance Management – Williamsport



Jun


19


Featured


Featured


9:00 am – 11:00 am


Fundamentals of Maintenance Management – Altoona



Jun


19


2:00 pm – 3:00 pm


CMMC in the Cloud: Navigating Cloud Provider Options for Compliance



Jun


26


Featured


Featured


8:00 am – 12:00 pm


ARC Flash Safety Training



Jul


17


2:00 pm – 3:00 pm


CMMC Is Now Law: What the 48 CFR Rule Means for Your Contracts


View Calendar


News

Central Susquehanna WSCM School Honored at Statewide Manufacturing Awards

As Central Susquehanna WSCM’s Best of PA nominees, Mount Carmel Area and Huntingdon Area Middle Schools recently joined IMC’s Lauri Moon, Manager of the Central Susquehanna WSCM program, at the What’s So Cool About Manufacturing® …

Read More

What’s So Cool About Manufacturing Video Contest Announces 2025 Central Susquehanna Awards

IMC is excited to announce the award recipients for the “What’s So Cool About Manufacturing?” (WSCM) Central Susquehanna student video contest awards.  The annual awards ceremony was held April 23rd at The Venue at Liberty …

Read More

IMC Announces the Release of its Central Pennsylvania Manufacturing Tariff Poll Results

We are pleased to announce the results of our Central Pennsylvania Manufacturing Tariff Poll. This initiative aimed to gather insights from regional manufacturers regarding the potential impact of proposed tariffs on the region’s manufacturing sector. We …

Read More
Copyright © 2025 IMC, Inc - Site Developed by Pineapple PC
One College Avenue, Dept. 32 Williamsport, PA 17701-5799