- As disruptions from the coronavirus pandemic continue to unfold, 64% of companies across the manufacturing and industrial sectors "are likely to bring manufacturing production and sourcing back to North America," to avoid similar difficulties in the future, according to a Thomas survey in April of 878 North American manufacturing and industrial sector professionals.
- "By embracing real-time resource management, redundancy, reshoring, and the convergence between the digital and physical supply chains, manufacturers will come out of this crisis even stronger than they were before," Thomas CEO Tony Uphoff said in a statement.
- Among industries, manufacturing reported the most interest in nearshoring, with 28% of manufacturing respondents saying they were "extremely likely" to bring more production and sourcing back to North America following the pandemic, the survey found.
The pandemic has highlighted how disruptions at suppliers and supply chain partners can cause production holdups and shortages for the purchasing business. Many U.S. companies were unable to obtain parts from suppliers when factories in China shut down earlier in 2020. Sixty-four percent of respondents in the Thomas survey said their company had been affected by the shutdown of a nonessential business.
Re- or nearshoring is one way to reduce risk by moving suppliers closer to the final market.
"If you're selling in a certain geography, then you should be looking for suppliers in that geography, whether it's North America, the U.S. or whether you're confined to a more local, smaller area," John Beattie, a principal consultant with Sungard Availability Services, told Supply Chain Dive in an interview.
Moving production from Asian countries to Mexico brings suppliers closer to market for U.S. businesses, and it cuts out the need for ocean or airfreight. But some manufacturers have also been frustrated by the country's handling of the pandemic, which has left many auto parts suppliers idle.
European apparel companies have been less likely than North American companies to cancel orders with suppliers because they have more nearshoring options, according to a report released this month by McKinsey.
The 2019 Reshoring Index from Kearney was positive for the first time since 2011, indicating net reshoring to the U.S. This was as a result of the trade war between the world's largest economies, but Kearney expects the coronavirus outbreak to result in companies going "further in rethinking their sourcing strategies — indeed, their entire supply chains."
But PwC has suggested as suppliers around the world have come back online, it has reduced the urgency of these moves. "But I still think that as companies look out for future incidents like this ... they are looking at ways to diversify their supply chains," Amity Millhiser, PwC vice chair and chief clients officer, said last month.
Shefali Kapadia contributed to this report.
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