The global supply chain crisis—see “WORLD’S SUPPLY CHAIN SNARLED UNTIL WELL INTO NEXT YEAR” (14 Sep 2021)—as we have forecast, will give rise to more manufacturing returning nations who want to become more self-sufficient (see 2022 Top Trend “SELF-SUFFICIENT ECONOMY”).
Termed “Reshoring,” presumably coined from “offshoring,” it will provide a new pathway for nations that possess the human and natural resources to make it at home.
On 30 November The New York Times cited several examples of U.S.-based companies that have to find domestic sources for materials previously procured from overseas, and/or move their production facilities back to the U.S.
Adding to the uncertainty of depending on shipments from around the world is the now increased cost; a container that once cost $5,000 to ship may now cost $20,000. Raw material costs have also risen.
Prices in October were 6.2 percent higher than the previous year, because of inflation. And not every company can pass higher costs on to customers; many have to honor contracts that were signed up to a year earlier.
Moving production and sourcing back to the U.S. has advantages, but questions remain as to whether the savings in shipping will offset the cheaper labor that attracted companies to Asia, and will there be workers to do the job?
Some products will never be made in the U.S., according to a Harvard Business School professor who warns that “It’s premature to expect a domestic manufacturing renaissance as a result of the supply chain mess,” and that “we are not going to assemble iPhones in the U.S.”
TRENDPOST: Some of those companies who have not yet “reshored” are contemplating moving their factories, if not back to the U.S. proper, at least to Mexico. For one thing, a great many Mexicans (who tend to possess a good work ethic) would be employed in their own country and be far less driven to seek “a better life” in “El Norte.”
Even companies that have never left are being impacted by higher costs for labor and materials. Many are buying more materials than they need in order to stay ahead of inflation, but that drives shortages that, in turn, further fuel inflation. It even puts a premium on warehouse space and drives up those prices.
TREND FORECAST: How will this all shake out? Reshoring will be part of the trend toward self-sufficient economies; it just no longer makes sense to be dependent on the vagaries of global supply chains; see “SELF-SUFFICIENT ECONOMY” (30 Nov 2021).
Meanwhile, labor costs, especially domestically, will never come down, and many companies will deal with that by drastically cutting or eliminating the human element of their workforces; see “JOB SLASHING: GOING DIGITAL AND GOING ROBOTICS” (18 May 2021).
This goes to our forecast that in the future more and more jobs—both menial and skill-based—will be eliminated by digitalization and robotics. Even the most traditional province of unskilled, cheap labor—the stoop labor of farmhands—will be replaced by robotics; see “ROBOTS TAKE THE (FARM) FIELD” (4 May 2021).