Procurement Trends in 2021: Reshoring  

Among the top procurement trends we saw in 2021 was the dramatic reshoring surge. As well as bringing sorely needed jobs back home to American soil from abroad, this practice also managed to save U.S.-based companies a bundle in overhead costs and more.  

With reshoring becoming a hot trend in 2021, the practice shows no signs of slowing as we head into 2022. Let’s explore a little more just what this procurement trend is all about, discuss what it has done for us so far, and make some predictions as to what we can expect from reshoring in the coming year.

What is Reshoring? 

In a nutshell, reshoring is the practice of bringing manufacturing and services back to the U.S. from abroad. This practice is both a speedy and efficient way to bolster a pretty battered American economy thanks (or no thanks) to the global pandemic fallout.  

By bringing operations back on U.S. soil, reshoring aids our nation in reducing unemployment with the creation of stable, manufacturing jobs that pay a decent wage. It also helps foster a much-needed skilled workforce in America 

Why was Reshoring a Trend in 2021?  

As mentioned earlier, reshoring has been rising, particularly seeing a massive spike in 2021. Much of the lion’s share of the reason for this trend was the mass disruption that the global pandemic caused in supply chains and the labor force. The world—the U.S. included—simply was not prepared to handle the shortages in labor and supplies, international shipping difficulties, and more chaos that broke on the scene to upend the status quo. Biden ordered reshoring as an executive order to help combat the shortages.  

Although battered and bruised, and much worse for wear, those companies that were able to weather the storm that first began in 2020 and wreaked the majority of its havoc in 2021 came out with hard lessons learned and new initiatives and strategies to better prepare themselves for any future disruptive surprises. Top on this list of focal points: Strengthening supply chains and reshoring as much as possible to keep operations close to home and benefit the local community. Other obstacles with overseas suppliers, such as availability of technical support and time zone differences, contributed to the interest in reshoring in 2021. 

Predictions for 2022 – what will reshoring bring procurement and supply chain?  

Experts, including Harry Moser, founder and President of the Reshoring Initiative, has predicted that reshoring will continue to be essential to U.S. manufacturing and economic recovery in 2021 and beyond. “To make the United States less vulnerable, there are now national initiatives to shorten and close supply chain gaps for essential products,” said Moser, noting that industries most likely to benefit include PPE, medical, tech, and defense.  

Moser added some numbers to his predictions: “We anticipate 2021 reshoring plus FDI job announcements to be near 2000,000, up by at least 25%. With 5 million manufacturing jobs still offshore, as measured by our $900 billion/year goods trade deficit, there is potential for much more growth.” 

Another expert prediction comes from the “2021 State of North American Manufacturing Annual Report” conducted by Thomas, a provider of actionable data, analysis, and tools supporting industrial procurement. The report predicts that the procurement industry will continue to place a significant priority on reshoring (emphasizing domestic sourcing and supporting local regarding supply chain), especially as the industry—and U.S. economy—continue to recover post-COVID. What’s more, we can expect to see the automotive and oil and gas sectors as among the most motivated to bring North American suppliers onboard to their supply chains. 

Stats were also supplied to support these forecasts, with the Thomas survey estimating that 83% of North American manufacturers will most likely reshore moving forward. If they do so, according to Thomas, it could mean upwards of $443 billion in U.S. economic value for our nation. 

It is clear that we are currently experiencing a worldwide reexamination of supply-chain relationships, and U.S.-based businesses are turning to reshoring while searching for local alternatives for suppliers aboard. In America, (U.S. manufacturers in particular) have an opportunity to lead the charge. So, how have you taken the first step? Will reshoring be the saviour procurement is looking for?  

By Michael Cadieux