The re-shoring phenomenon that you heard so much about over the last year or two is continuing, with varying impact on industries, producers and regions. The bulk of the headlines have dealt with the move away from the 
knee-jerk impulse to source everything from China to focus on making things in-house or sourcing from local suppliers. It is happening and is continuing, although the overall effect is somewhat less dramatic than a lot of the commentary would have you believe. Companies are, indeed, making or buying locally what they were previously sourcing in China. But it is not a U.S. manufacturing renaissance and U.S. manufacturing employment is not growing dramatically, albeit the decades-long decline has reversed into a modest increase.
Re-shoring is driven by changed economics – 20% annual increases in labor costs in China, currency fluctuations, increased transportation costs, supply chain risk. The reason the jobs aren’t coming back is due to automation, which drives labor content out of products, eliminating much of the China cost advantage, but also means fewer people are required to produce the goods now being made here.
Beneath the headlines, what’s really happening is a growing recognition of supply chain risk and an increasing appreciation for the benefits of shorter lead times, smaller lot sizes and supplier agility. Rather than focusing on re-shoring, industry observers are identifying the evolution of a regional sourcing model. A long supply chain has its costs and risks. There are great benefits to producing products where they will eventually be sold and procuring needed parts and materials where they will be used to make those products.
This isn’t really new, but is becoming more widespread. All of the world’s major automakers build cars for the North American market in North America. They make Mercedes in Alabama, Toyotas in Kentucky and VWs in Tennessee. Ford builds cars in China to sell in China. And the list goes on.
We live in a global market and large areas of the planet are evolving from relatively undeveloped and agrarian societies to big markets for manufactured goods. China’s manufacturers are transitioning from being the world’s factory to serving the increasing demands of the evolving Chinese middle class.
Re-shoring is real and it is having an impact on U.S. manufacturing. But it is just a subset of the global regionalization movement that is changing the way things are made and sold around the globe.