3 Keys to Reshoring in Manufacturing
It’s a question which many in the Canadian manufacturing industry are hearing regularly if not often; at the very least, chatter about the possibilities of doing so: is it time to bring manufacturing operations back onto home soil?
It’s no secret that the pandemic exposed some pretty vast holes in many supply chains, along with bringing to the forefront some strong vulnerabilities with regards to logistics, shipping costs, tariffs and more; offshore politics can play a part, even. As a result, many are wondering if having their facilities and operations on home turf would make a difference. Could that be the future for your business, too?
There are three key factors which need to be taken into account before taking the plunge into reshoring:
Costs – output and ongoing
Many businesses are understandably tempted by international waters and the subsequent cost savings they offer. The prospect of a more profitable business is a great one but, as recent events have showed, continuity may prove to be more important for long-term, sustainable growth.
Reshoring in manufacturing will require a large investment from the outset, then potentially an uplift in costs ongoing. You’ll need facilities, machinery, and the people which run it. You’ll need to consider the costs involved with transitioning smoothly from one supplier to a new one (in fact, just finding suppliers who make sense with regard to your new location could prove time-consuming and costly). And, after these initial costs, there are the long-term expenditures to think about. Does business continuity in the event of something unprecedented (i.e. a pandemic) outweigh the money saved by having facilities off-shore running for cheaper? Even if the initial outlay is viable, it’s worth nothing without a sustainable plan to continue growth and make back that initial investment.
People – workforce and community
When reshoring in manufacturing, there are almost endless questions to think about with regards to your workforce. Are the staff we need in this area, let alone available? Will we need more or fewer people to cover our new facilities? What do these people need to be competent in? What experience would benefit us the most right now? What is our value proposition as a local employer? Where will we fit into the local community?
Before you return to Canada, there’s much research to be done; the challenges, whilst not insurmountable, are numerous and far-reaching. You’ll need to have a deep understanding of what the difference in cost is going to be with regards to labour, along with any perceived skills shortages. You’ll need to build a strong hiring and talent development strategy (pro tip: we can help you with that!) and overall make sure you put the right people in key places from the off.
More than just costing out the exercise of building a workforce, consider the effects your being there could have on the local community. Will you create new jobs at the disposal of others? Do the benefits outweigh the negatives for the area? Again: research, research, research.
Culture – brand and ethos
It’s no secret that locally made goods are becoming highly regarded and sought after. When considering reshoring in manufacturing, think about the impact it could have on your brand, how your business is perceived by customers, the company culture you’re cultivating. You’ll find that manufacturing your products on home soil may play into this – and largely in a positive light. Sourcing materials locally and building this ‘local’ ethos into your brand can work wonders when it comes to exposure, talent attraction and, fundamentally, growth.
The government (at both federal and provincial level) have been talking numbers for grants and incentives available to manufacturers who want to re-shore. For some businesses it’s entirely unfeasible, for others makes senses to do in parts, and for many it’s become a no-brainer. If bringing operations home is the path your business is following in the wake of Covid-19, we’d love to talk about making your transition a smooth one when it comes to building a high-performance workforce who can take the reins – get in touch.