Reshoring may be building back U.S. manufacturing

Published
January 27,2022 - 08:45pm
Reshoring

Media reports and industry analysts suggest that reshoring U.S. manufacturing could be the wave of the future. While some of this momentum comes from COVID-19 pandemic-related shortages and shutdowns and supply chain back-ups; in the long-term reshoring has the potential to save U.S. manufacturers critical production time, reduce transportation costs and could better support just-in-time production by reducing capital tied up in stock.

Recognizing all these advantages, President Biden is prioritizing reshoring and despite the negative impact of COVID-19, reshoring numbers are up. Some information recently shared by the United States Cutting Tool Institute (USCTI) provides perspective. In its June 2021 E-News, citing U.S. Department of Commerce data from the Investment Advisory Council (IAC), the USCTI wrote “Reshoring has been hot in June” in an article headlined, “Reshoring Sets New Record in 2020. U.S. Needs Much More.” 

Highlights from the Reshoring Initiative 2020 Data Report: “COVID Drives Cumulative Jobs Announced Past One Million”2 provide further insights:

  • In 2020, U.S. reshoring set a record of 109,000 jobs and outpaced Foreign Direct Investment (FDI) for the first time since 2013. COVID/supply chain uncertainty has resulted in companies emphasizing U.S. operations.
  • National initiatives to shorten and close supply chain gaps for essential products aim to make the U.S. less vulnerable. The medical instruments and devices, semiconductor chips and defense industries will be the first to benefit. Medical equipment is one of the “first responders” of reshoring, with 2020 jobs up 400% from 2019.
  • It’s anticipated that 2021 reshoring and FDI job announcements to be near 200,000, up by at least 25% from 2020. 

ARCH Cutting Tools – we never left
As U.S. manufacturing builds back through reshoring, supplying and supporting this trend is critical to its long-term success. ARCH Cutting Tools is uniquely positioned to support this build-back because we resisted the off-shoring trend of the past decade.

While other organizations pursued what proved to be short-term cost savings through off-shore manufacturing, ARCH Cutting Tools focused on U.S.-based economic development and production that relied on its culture of all-American innovation, engineering, and quality manufacturing. We remained U.S.-based because it simply made sense for us, and more importantly for our customers.

In fact, in the challenging business environment created by the COVID-19 pandemic, ARCH Cutting Tools invested in many its U.S. locations and communities to improve customer service levels. 

In spring 2020, when many other manufacturers were shut down for various pandemic-related reasons – transportation delays, component un-availabilities, labor shortages – we created and launched our Centralized Distribution Center (CDC), located on the ARCH Cutting Tools Midwest campus in Warren, Mich. This consolidated, state-of-the-art distribution center now provides U.S. manufacturers the very best general machining and high-performance cutting tools on the market when they’re needed. 

We’re able to deliver like this because we have consistently built the strength of our business from within, with innovative approaches like interplant manufacturing to effectively manage production capacity between facilities and maximize our ability to meet the demands of the market.

Building for the Future
It’s clear that reshoring strengthens the U.S. economy – it helps balance our trade and budget deficits, increases employment by creating good-paying manufacturing jobs, and builds an increasingly skilled workforce. And reshoring is good for manufacturing companies too, because done efficiently it can reduce the total cost of production.
The Reshoring Initiative puts it this way in promoting the importance of reshoring: “…shift the collective thinking from ‘offshoring is cheaper’ to ‘local reduces the total cost of ownership.’”

At ARCH Cutting Tools we know that speed wins the day. We’re routinely reminded by our manufacturing customers of the growing importance of domestic cutting tool manufacturing and to expeditiously meet the growing need for engineered cutting tool solutions.  As ARCH Cutting Tools offering has grown in both depth and breadth, maintaining the speed and agility that has made us successful has become one of our key differentiators with US manufacturers as onshoring continues. Customers are increasingly expecting solutions that cannot be met by longer supply chains.

As U.S. manufacturers begin to believe in reshoring and recognize all its advantages, ARCH Cutting Tools is leading the industry in building back American manufacturing because we always believed in the strength of the U.S. market, and we never left.

Related Glossary Terms

  • just-in-time ( JIT)

    just-in-time ( JIT)

    Philosophy based on identifying, then removing, impediments to productivity. Applies to machining processes, inventory control, rejects, changeover time and other elements affecting production.