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The Realities of Reshoring in 2010

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The Business Outlook Survey realeased yesterday by the Federal Reserve of Philadelphia paints a bit of a bleak picture of realities of reshoring production to the US.

Among the responses, manufacturers in that region reported offshoring more production than they did 2 years ago, and fewer said they'd returned production to the US. I found at least one Blog post that boo-hooed these findings as a trend. "Sorry, folks," begins the post. "It looks like more factories are leaving the U.S. than coming back."

PhillyFed

Let's be realistic. The economy, employment, uncertainty surrounding emerging regulations and the deficit aren't lifting a lot of spirits in manufacturing these days. But offshoring has been trending upwards for over 20 years. It's going to take time (and a lot more than that) to create a reverse trend. It won't happen overnight.

To date, little has been actually done to encourage any significant reshoring of production back to America. The Gubmint has gone all-in bailing out the financial cats & banks, but precious little to fundamentally support indigenous manufacturing. Sure, suspending tariffs is a good start - but that's like using a squirt gun on a forest fire. Think we'll see iPods made here anytime soon? Read the bill & materials list and see how you'll be affected. Likely, it ain't much.

For US manufacturers in 2010, the best position is to expect more significant buying companies to explore reshoring to improve total landed costs. But the frequency of those exercises will drift with energy costs and other floating influences until we focus and apply influence.

Until there is a comprehensive US manufacturing & trade policy, we should expect to see a trickle rathe than a trend.

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