Onshoring and Reshoring Offer New Links in Supply Chain

Regional Manufacturing Centers Offer Benefits, Including 'Made In USA.'

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“The pandemic exposed supply chain risk that was previously unrecognized or dismissed,” says Paul Danks, president of the Society of Industrial and Office REALTORS®’ European Regional Chapter and director of global corporate solutions for DeVono Cresa in London. For example, over 50% of all freight is transported in the belly of passenger jets. When commercial flying virtually stopped because of COVID-19 fears, that immediately disrupted the supply chain of certain items.

One suggestion has been a “China-plus-one” strategy, which means reducing risk while still taking advantage of lower labor costs in Asia. Plus-one can mean regional manufacturing centers across the U.S. or nearshoring in Mexico. These solutions offer a shorter distance to marketplaces, lower transportation costs, corporate technology dispersed through the U.S., and the marketing advantage of having a product “made in America.”

Three U.S. cities that might not seem to be prospects for onshoring benefits have learned otherwise.

Miami—Raw materials and products that come from Latin America generally go through the port of Miami, “which is busier than ever,” says John Steinbauer, SIOR president of Steinbauer Associates Inc. in Miami. “From an international standpoint, we are getting materials and product, mostly from Latin American suppliers, and because of that, we have gotten along fine during the pandemic,” says Steinbauer. All that product and material sometimes has to be warehoused, which is an added benefit.

Editor’s Note

This article was excerpted from “Staying Closer to Home,” published in the Summer 2021 issue of SIOR Report.

Oglesby, Ill.—In 2019, the North Central Illinois Economic Development Corporation, based in Oglesby, Ill., commissioned a study on value-added production in two important economic sectors: agricultural processing and metals fabrication. The Biden administration has mentioned both sectors as being critical to corporate supply chains and needing to be reshored.

“We did a deep dive on costs, looking at our area versus competing locations in the Midwest,” says Mike Kirchhoff, SIOR affiliate member and CEO and president of the development agency. “Just in the agriculture and food processing sector, a company that chooses to locate here can save up to $2 million in its first year of operation. That’s before incentives are applied and based on a hypothetical facility with estimated usage in all categories, including work force, real estate, construction, and taxation.”

Dallas—“We are extremely busy here,” says Conrad Madsen, SIOR, CEO and co-founder and partner of Paladin Partners. “The Dallas Regional Economic Development Chamber is getting flooded with inquiries as companies are pulling manufacturing out of China and moving their operations back to the U.S. Due to our ease of doing business, cost of living, central location, and labor pool, Texas is the catcher’s mitt for many of these relocations.”

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