Reshoring

Reshoring, also known as onshoring or backshoring, is the process of bringing manufacturing and related activities back to the country of origin after they have been offshored to overseas locations. It often involves a combination of domestic production, nearshoring to neighboring regions, and changes in supplier networks to reduce dependency on distant suppliers.

Drivers of reshoring include fluctuations in exchange rates and labor costs, disruptions to global supply chains, shifts in trade policy and tariffs, and the desire for greater supply chain resilience and shorter lead times. Advances in manufacturing automation, digitalization, and process improvements also make domestic production more cost-competitive in certain sectors. Companies may pursue reshoring to improve intellectual property protection, quality control, and responsiveness to customer demand.

Benefits commonly cited for reshoring are stronger domestic employment, increased domestic investment, and enhanced national or regional economic activity. Shorter supply chains can reduce inventory requirements and transportation emissions, while closer oversight can improve quality and compliance with regulatory standards. However, reshoring can entail higher production costs, the need for capital investment, and potential labor and skill gaps that must be addressed through training and workforce development.

Trends and policy responses have varied by country and industry but generally include programs to incentivize domestic manufacturing, upskilling of the workforce, and infrastructure investments. Nearshoring, moving operations to nearby countries, is often discussed in parallel as part of a regionalization strategy. The decision to reshore depends on sector, technology, total cost of ownership, and broader strategic objectives rather than a single universal pattern.