We've been hearing a lot about reshoring lately, not necessarily citing specific numbers, but rather increased interest and contracts from brand owners and OEMS who want to see more production close to home.
In the June Numbers That Matter Live webinar, PN's resident economist Bill Wood says that if reshoring really is a solid trend, it is one that is beginning to finally recognize hidden costs in low-cost sourcing.
"I'm very hopeful that people who are considering reshoring or who are in the supply chain … start to be more aware of the externalized costs," he said. "All of the costs that got pushed to the side, pushed down the road, pushed to someone else by buying from low cost countries."
That could mean the costs associated with keeping shipping lanes open — not just in terms of maintenance, but keeping military strife at bay — investing in dredging ports for larger ships or supporting other governments in your free trade agreements. Add in the costs of using and insuring containers and moving them from the port to your business, and it gets very expensive. That doesn't mean turning away from global trade opportunities, he said, but rather the importance of factoring all of those issues into sourcing decisions.
"I hope that people are more aware now of all of those potential costs and risks and factor those into the price of the products and the value proposition as well," he said. "In my opinion, if companies were to do that, that would enhance demand for more locally sourced goods and services which would ramp up the amount of reshoring."