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.