Navigating Modern Manufacturing: On-Shoring and Near-Shoring in 2024
Economic, geographical, and political factors continue to influence manufacturing strategies related to on-shoring and near-shoring. Different approaches have emerged as businesses look to reduce risk and improve efficiency while maximizing the benefits of the latest USMCA Trade Agreement.
Using our U.S.-based manufacturing, raw material inventory, and overall responsiveness
Speedtech International works with manufacturers and distributors nationwide, assisting them in improving deliverability and avoiding costly disruptions.
Learn more about how on-shoring and near-shoring continue to improve business practices and how working with Speedtech International can help your company stay competitive and timely in these challenging times.
Recent Port Disruptions
In 2024, the U.S. experienced several significant port disruptions, which caused massive economic losses and supply chain delays across manufacturing industries.
Most recently, the East and Gulf Coast dockworkers’ strike, involving 45,000 workers at 36 major ports from Maine to Texas, resulted in daily losses of a few billion dollars. This coast-wide strike, driven by disputes over wages and automation, halted critical shipments of materials needed for manufacturing sectors.
West Coast port congestion, especially at Los Angeles and Long Beach ports, leaves cargo ships stuck waiting days to unload your materials.
Up north, the Port of Montreal’s three-day strike disrupted cross-border trade between the U.S. and Canada, leading to $825 million in losses over just a few days, further complicating supply chains.
Amid these disruptions, Speedtech International provided a reliable solution through its U.S.-based manufacturing operations.
While other companies grappled with costly delays and uncertainty from international shipping, Speedtech International’s localized production ensured that our clients’ supply chain remained uninterrupted.
On-Shoring
On-shoring involves returning manufacturing to a company’s home country to avoid supply chain disruptions and potential international conflicts that can cause delays.
As of 2022, 360,000 manufacturing jobs returned to the U.S., and nearly 400,000 are expected to return in 2023.
Recent Supply Chain Disruptions
Relying solely on offshore suppliers puts you at risk. You risk various disruptions causing delays or, worse yet, shutting down your manufacturing line.
OEMs continue to transfer production domestically to avoid shortages of critical components and to significantly reduce delays. This allows companies to adopt just-in-time inventory practices, reducing the need for extensive warehousing and minimizing the risks of supply chain disruptions. In addition, you enhance supply chain visibility and ensure that you can meet your production schedules.
Two recent examples help show why more businesses are investing in American on-shoring.
The Baltimore Bridge Accident
The collapse of the Baltimore Bridge in early 2024 created many logistical problems for businesses. Because of the bridge collapse and the shutdown of the harbor, companies were forced to reroute shipments, leading to delays in production schedules and increased expenses.
As a result, at least 500 companies, including various supply chain, logistics, and transportation companies that used the port, filed for federal disaster loans.
California Freighter Backup
Congestion at the major ports across California left numerous cargo ships waiting to unload their shipments. This resulted in significant delays and additional costs for businesses waiting for their materials to arrive at their facilities.
Increased Fuel Prices
An increase in fuel prices has triggered an increase in international shipping costs. At some point, the fuel price becomes prohibitive to global manufacturers and incredibly expensive (especially for large, bulky, or heavy items).
By transferring manufacturing back to the United States, businesses mitigate the risk of increasing fuel prices.
Three Reasons why On-Shoring is Booming in 2024
1. The COVID-19 Pandemic
While on-shoring existed pre-COVID-19, the term grew in popularity and rose exponentially in the years following. Due to travel restrictions and issues with global supply chains, manufacturers wanted to bring production back to the United States for stability and reliability.
2. Consumer Preferences
U.S. consumers’ demand for “Made in the USA” products grew throughout 2023. Almost ⅔ of American buyers wanted products that said “Made in America” because they believe American-made products are more reliable, stronger, and foster a stronger United States economy.
3. International Politics
Trade wars, tariffs, and geopolitical instabilities have led to more manufacturing jobs in the United States. Tensions between trade partners like the U.S. and China have led to the implementation of tariffs on imported goods, causing companies to rethink their strategies.
Other world events, such as Brexit and the ongoing conflicts in various parts of the world, have made companies wary of the risks of relying on foreign production. Shipping routes interrupted by terrorism or the sudden inability to manufacture products overseas have increased the need for a reliable supply chain.
Near-Shoring
Near-Shoring relocates business processes to nearby countries or a supplier whose manufacturing is located closer to your warehouse or production.
By moving production closer to home, businesses reduce transportation costs, speed up response times, and improve supply chain reliability. As a result, dependency on distant production hubs suddenly decreases significantly.
By relocating closer to home, companies avoid supply chain disruptions and maintain a more stable production process.
The USMCA Agreement
The 2020 US-Mexico-Canada Agreement (USMCA) incentivized companies to shift their supply chains to North America, further securing supply chain stability.
Increased Regional Value Content Requirements
The USMCA increased the regional value content requirements for products to be considered as made in North America.
For instance, 75% of a vehicle’s components must be manufactured in North America to qualify for tariff-free treatment, up from 62.5% under the previous NAFTA agreement.
Streamlined Customs Procedures
The agreement simplified customs procedures and reduced administrative burdens, facilitating smoother and faster cross-border trade within North America.
This reduction in red tape helps companies maintain efficient supply chains and reduces the costs associated with moving goods across borders.
Impact of Tariffs on China
The USMCA was implemented during the U.S.-China trade war, which saw significant tariffs imposed on Chinese goods.
These tariffs increased the cost of importing from China, making near-shoring to Mexico and Canada a more attractive alternative for many U.S. companies looking to avoid high tariffs and reduce their dependence on Chinese manufacturing.
Successful Near-Shoring Initiatives
Several industries have successfully implemented near-shoring strategies, enhancing efficiency and reducing costs.
For example, the automotive industry in Mexico has seen a 13% increase in FDI for car and truck manufacturing.
Similarly, the electronics manufacturing sector has grown by 37% between 2018 and 2023, demonstrating the effectiveness of near-shoring in boosting production capacity and meeting market demands.
Why You Should Work with an American Hook-and-Loop Fastener Supplier or Manufacturer
Working with an American-based hook-and-loop fastener like Speedtech, lets our customers rest assured that supply chain disruptions will be minimized.
At Speedtech, over 80 % of the products we manufacture are fabricated using domestically sourced raw materials, such as VELCRO® Brand ONE-WRAP®.
We then fabricate from these materials at our ISO 9001:2015 certified factory located in Racine, Wisconsin.
By buying components locally, businesses receive high-quality hook-and-loop fasteners exactly when needed.
Just-In-Time Inventory
Speedtech International excels at just-in-time inventory, a “management method in which goods are received from suppliers only as needed,” which leads to lower inventory holding costs and increased product turnover.
Because of our Fabricated in America status, our teams synchronize production schedules with demand, reducing the need for extensive warehousing. You get the products you need right when you need them.
Greater Visibility and Reliability Over Your Supply Chain
Larger OEMs understand the total cost of acquisition. This cost goes beyond the price listed on a quote from a supplier and considers savings your procurement or buyers can pocket by not having to constantly check in on the whereabouts of the goods in transit to them. Every time you need to try and locate where your products are on the water, at a port, or in customs, it is valuable time that could be spent on more meaningful endeavors.
Working with Speedtech gives buyers complete visibility over your supply chain. This visibility lets you know how long something might take and where exactly production is.
This transparency allows for better planning and forecasting, reducing the risk of unexpected delays and stockouts. Due to precise and predictable supply chain activities, businesses now experience fewer disruptions in their operations, translating into better customer satisfaction and timely delivery of hook-and-loop fasteners and the products we make using them.
Now is the Time to Reach Out to Speedtech International
With the current shifts in manufacturing strategies towards on-shoring and near-shoring, there has never been a better time to optimize your supply chain by partnering with a reliable American-based supplier like Speedtech International.
Here’s why we think now is the best time to reach out to one of our team members:
Enhanced Supply Chain Stability
Partnering with Speedtech International helps mitigate supply chain disruptions and ensures a more stable and predictable supply chain.
Our U.S.-based operations reduce the chances of delays caused by international conflicts, shipping bottlenecks, and geopolitical uncertainties.
Cost-Effective and Timely Delivery
Shipping costs have skyrocketed, especially for goods coming from Asia.
The cost to ship a 40-foot container from China to the West Coast can reach $15,000 while shipping the same container from Mexico costs significantly less at around $2,480-$2,742.
Speed International’s proximity allows for lower transportation costs and quicker delivery times, ensuring your products arrive on time and within budget.
Support for Domestic Manufacturing
Nearly two-thirds of American buyers prefer products manufactured domestically, associating them with higher quality and supporting the local economy.
By choosing Speedtech International, you align with this growing consumer trend, enhancing your brand’s appeal and marketability.
Compliance with USMCA Standards
Working with Speedtech International can help you take advantage of the USMCA’s benefits, which include reduced tariffs and smoother cross-border trade.
Just-In-Time Inventory Management
Our expertise in just-in-time (JIT) inventory management means you receive goods only as needed, reducing holding costs and improving cash flow.
Greater Visibility and Control
Working with Speedtech International gives you real-time insights into production status, allowing for better planning and forecasting. Reduce the risk of stockouts and ensure timely delivery of your products with our U.S.-based manufacturing.
Ready to Work with Speedtech International?
Speedtech International is your reliable partner dedicated to helping you navigate the complexities of modern supply chain management. Contact us today to learn how we can support your manufacturing needs and drive your business forward.