More American companies that have traditionally outsourced parts of their business are moving them back to the United States, an action dubbed as "reshoring." While the ostensible reason—patriotically bringing jobs home—may be PR-driven, what's actually bringing many companies back is rising Chinese labor costs.
Wages there and in other low-cost countries are rapidly increasing, partly due to laborer unrest. Strikes are becoming more common as workers from these countries demand better pay and rights.
Harry Moser, founder of the Reshoring Initiative, says that 60 percent of companies underestimate the costs of outsourcing. He also points out that reshoring boosts innovation because engineering departments are brought together with the production departments.
According to a study by Deloitte, retailers also are turning to reshoring as a strategy to reduce transportation costs and to manufacture products requiring less labor more cost effectively. In the long term, alternative approaches to production also may boost the reshoring trend: Companies are depending more on machinery to manufacture their products, moving away from human labor entirely.
