A general direction in which something is developing or changing.
- Definition of a trend
If that something is Reshoring then we need to understand “Reshoring”.
Harry Moser, Reshoring Initiative, use 3 definitions for moving products from one territory to another:
- Offshoring: Moving domestic production to foreign shores
- Reshoring: Moving foreign production to domestic shores
- Nearshoring: Moving foreign production closer to home (Mexico, Middle America, Canada)
It was the time when the markets for components, including magnetic components, shrank dramatically over a very short period. Harry Moser estimates that between the years 2000 and 2008, 100,000 to 150,000 jobs per year were offshored. Little was seen in the area of reshoring.
As of 2012/2013 the trend has almost reversed. Only around 30,000 to 50,000 jobs per year are still being offshored, however around 30,000 jobs are near- and reshored. Counting in the increase of productivity in the USA as well as the comparable low energy cost in the USA and Mexico as well as the comparable low labor cost in Mexico, NAFTA today and in the years to come will experience a renaissance in manufacturing, reshoring and nearshoring substantially more jobs than offshoring.
Another factor supporting this trend is the everlasting increase in the cost for international transportation, as well as the increase in cost for compliance with international laws.
Is there any supporting evidence of reshoring? Yes there is.
On a big scale GE invested in excess of $1 billion to build a new appliance factory in Louisville, KY, using lean manufacturing processes. This is the same GE which reduced its labor force by 20% in offshoring jobs over the last 10 years (according to The New York times).
In the beginning of November 2013, Apple signed a $578 million contract with GEAT to produce sapphire wafers and substrates in Mesa, AZ, bigger and better than anywhere in the world.
These are just two examples representing the new trend in reshoring.
We see similar trends in our market for magnetic components and products, though yet only sporadic, but gradually formulating into a stronger trend. It always starts with design work and prototypes. The demand for samples has increased remarkably over the last 6 months, a strong sign of ‘good things’ to come. The cost/benefit of reshoring jobs is convincing and will further slow down the trend of offshoring. We see it coming already. 2014 will be a much better year for our customers and for us as a supplier of magnetic components and thermal interface materials. We see it, feel it and experience it.
Contact us and we will help.
MH&W – A Powerful Solution.