Reshoring? Panjiva’s New Report Suggests Sourcing Professionals Are Ambivalent

Reshoring is a hotly debated topic in the procurement and sourcing world, as well as a favorite topic of late on Spend Matters. Despite all the recent attention given to reshoring, a new report from Panjiva suggests that it is still far from becoming a trend among American companies. In late August, Panjiva released Manufacturing in the U.S.—Movement or Myth?, which details driving forces and deterrents behind companies’ decisions to use U.S. manufacturers, information that is derived from a survey of more than 150 sourcing professionals.

For supporters of reshoring, the good news is that 75% of the buyers surveyed currently source from the U.S. However, 80% of buyers limit how much they buy from American manufacturers due to high costs. While short turnaround time makes sourcing from the U.S. attractive, buyers are more concerned with keeping costs down. Furthermore, the data suggests that poor working conditions abroad are not a big factor in companies’ decisions whether to source domestically.

In regards to this last point, Panjiva’s CEO Josh Green explains, “The sourcing executives I talk to are very concerned about the state of working conditions abroad. But the paths they’re considering include staying where they are and investing in improving work conditions, or moving to different emerging markets… in these labor-intensive industries, ” Green goes on to say that corporate buyers are not certain whether consumers will actually pay more for American-made goods or whether it’s all talk.

And contrary to all of this, Walmart has been in the headlines for its “Made in America” campaign, in which the company pledged to buy $50 billion more of American goods over the next decade. Sure, it’s been met with some skepticism. What does Green think of this campaign? “Outstanding. One of the key things holding back investment in American manufacturing is lack of clarity about whether there will really be demand for American made products. Walmart's commitment to buy $50 billion worth of product provides those contemplating investment with reassurance that there will in fact be demand.” Now the question is whether other retailers will do the same.

You can download the full report here.

Voices (2)

  1. Harry Moser:

    The article mentions concern about higher cost for U.S. products. This is true in some cases. However, in about 25% of the cases of offshoring, the U.S. price is higher but the total cost is lower. The not-for-profit Reshoring Initiative’s free Total Cost of Ownership software helps corporations calculate “hidden costs” and thus recognize the real P&L impact of reshoring or offshoring .

    Reshoring has grown rapidly since 2010 and offshoring is slowing to the extent that the two processes are about in balance for the first time in decades. Repeated surveys by Boston Consulting Group, MIT Supply Chain Forum, MFG.com, Deloitte and others consistently show a sizable and growing percentage of companies deciding to reshore at least some of their production and sourcing.

    The Reshoring Initiative tracks all reported and some private cases of reshoring and concludes that about 80,000 manufacturing jobs have been reshored since Jan. 1, 2010.

    More than 200 larger companies have publicly announced reshoring actions. These actions inevitably impact thousands of domestic suppliers.

    Readers can help bring back jobs and increase profitability by asking their companies to reevaluate offshoring decisions. Suppliers can use the TCO software to convince their customers to reshore.

    Readers can reach me for help. Harry.moser@reshorenow.org

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