Reshoring Jobs to the US: Opportunities and Challenges

In recent years, the trend of reshoring jobs to the United States has grown, creating a tremendous amount of site selection activity, especially in the industrial sector. This trend has been driven by a variety of factors, including rising labor costs in some overseas countries, supply chain disruptions caused by the COVID-19 pandemic, geo-political risks and government support. In this blog post, Site Selection Group explores some of the opportunities and challenges associated with reshoring jobs to the U.S.

Opportunities of reshoring jobs to the US

One of the main advantages of reshoring jobs to the U.S. is the potential for cost savings. While labor costs in the U.S. may be higher than in some overseas countries, other factors such as transportation and logistics costs, intellectual property protection and quality control can offset these higher labor costs. By reshoring jobs to the U.S., companies can improve their supply chain resilience and reduce the risk of disruptions caused by natural disasters, political instability or other factors.

Another advantage of reshoring jobs to the U.S. is the potential for improved quality control. It can be difficult for companies to monitor and ensure quality standards when their products are manufactured overseas. By bringing manufacturing back to the U.S., companies can have more direct oversight over their operations and improve the consistency and reliability of their products.

Additionally, the economic impact on local communities and states can be meaningful which creates the opportunity for federal, state and local economic incentives. These projects can be eligible for economic incentives such as tax credits, tax abatements, cash grants, real estate grants, utility rebates and infrastructure grants. The economic incentives are typically based on a combination of factors including capital investment, job creation and wages. 

Challenges of reshoring jobs to the US

Despite the potential benefits of reshoring jobs to the U.S., there are also some challenges associated with this trend. One is the higher labor costs in the U.S. compared to some overseas countries. This makes it more difficult for office sector projects such as call centers and shared service centers to reshore operations. While other factors can offset these higher costs, companies may still face difficulties in competing with offshore operations that can offer lower labor costs.

Another challenge is the need for skilled workers in the U.S. Many jobs require specialized training and expertise, and there is concern that there may not be enough U.S. skilled workers to fill certain positions. To address this challenge, state-level workforce development departments and impacted companies are investing in training and development programs to build the skills of their workers.

Finally, companies face potential regulatory challenges with reshoring jobs to the U.S. U.S. regulations can be more stringent and complex than those in some overseas countries, which can increase costs and create logistical challenges for companies. To address these challenges, companies may need to work closely with government agencies and other stakeholders to ensure compliance with relevant regulations.

Conclusions

Reshoring jobs to the U.S. has the potential to offer many benefits, including cost savings, improved quality control and governmental support through economic incentives. However, there are also significant challenges associated with this trend, including higher labor costs, a lack of skilled workers for certain positions and potential regulatory hurdles. By understanding these opportunities and challenges, companies can make informed site selection decisions about whether to reshore jobs to the U.S. and where to do so successfully utilizing proven site selection methodology.