Prepare for Reshoring

Reshoring is a hot topic in the United States. The practice promises an increase in jobs for workers, profits for manufacturers and a revival of the Made in America movement. I’d like to address how small- to medium-sized manufacturers can prepare for a manufacturing resurgence driven by reshoring and regulatory changes.

Jonathan Wilkins

Reshoring is the transferring of a business operation that was moved overseas and then back to its country of origin. In this case, U.S. manufacturers are bringing their services home from other manufacturing economies, such as Asia.

What’s Driving this Change?

Impending regulation by the International Maritime Organization (IMO) has mandated a reduction in fuel emissions in a bid to lessen the environmental impact of ships. The regulation goes into effect in January 2020 and is predicted to rapidly drive up demand for higher quality fuels for shipment.

Increasing the cost of transporting goods across seas, the regulation means it will become more cost effective for goods typically made in China—20% of the world’s manufacturing output—to be sourced from homegrown or near-shore manufacturing facilities. Sounds great, doesn’t it?

Headlines suggest that manufacturing is coming home. However, a renaissance of America’s industry would never be that simple, particularly for small- and medium-sized manufacturers.

Back in the 1970s, when the U.S. produced 18% of the world’s total goods, the industry looked a lot different from the sector we know today. Although automation and robotics were present in some factories, the technology was certainly not common. One of the arguments on why Asia is ahead in the global manufacturing race is due to the region’s aggressive deployment of automation.

China, for example, is the world’s largest market for industrial robotics, boasting sales close to the combined volume of Europe and both North and South America in 2016. The U.S. is certainly not averse to automation, but use has been limited to large-scale facilities. As the manufacturing renaissance begins, this must change.

Small- to medium-sized manufacturers have no doubt heard of the smart factory movement. However, one would be remiss to think investing is too expensive. Investing doesn’t require an entire systems overhaul; industrial parts suppliers are helping manufacturers to make small incremental changes to automate production.

Consider this example. A manufacturer of peripheral products for automotive production, such as electrical control and security products, may already use a Selective Compliance Assembly Robot Arm (SCARA) to assemble circuit boards. However, the facility may not have an adequate programmable logic controller (PLC) to control the robot and any associated automation, such as a conveyor, effectively.

By investing in new technology to complement automation, the manufacturer could reap significant production rewards. In this instance, the PLC system could completely synchronize the conveyor and SCARA, and allow circuit boards to be assembled without pauses in production.

Should the IMO’s fuel emission regulation cause increased costs for overseas imports, improved productivity in U.S. facilities will be essential. America cannot seed entirely new production facilities to replace the large amounts of manufactured goods we currently import from Asia. However, manufacturers can prepare to increase capacity by using automation.

When large organizations are hit with larger invoices from overseas suppliers, the U.S.’ small- and medium-sized manufacturers must become the go-to guys. For this to succeed, these businesses’ access to the technology that will allow them to manufacture as efficiently and quickly as their overseas predecessors must be readily available. 

Mark Howard is U.S. country manager for EU Automation. Jonathan Wilkins (pictured) is a director at EU Automation. The company specializes in the fast delivery of new, used and refurbished industrial automation parts to manufacturers across the United States.