Survey: COVID-19 Propels Manufacturers to Reshore Operations
Chad Schron, Senior Director, Tooling U-SME on
July 23, 2020
COVID-19 shines a bright light on challenges related to the supply chain — some already felt before coronavirus hit — so it’s no surprise that manufacturers are considering moving production back to the U.S.
According to the SME 2020 COVID-19 Future Outlook Study, one-quarter of respondents indicated their company plans to reshore manufacturing production to the U.S.
In addition, one-third said that their company will be shifting to more U.S.-based suppliers/localizing their supply chain.
- 25% of respondents indicated their company plans to reshore manufacturing production to the U.S.
- 33% of respondents said their company plans on shifting to U.S.-based suppliers
- 39% of respondents indicated that their companies will initiate cross-training to help workers take on new job roles
The U.S. government is also financing projects to bring supply chains back to the country.
In late June, the Defense Department and the U.S. International Development Finance Corporation signed a joint memorandum of agreement “to spend $100 million of the department's Coronavirus Aid, Relief and Economic Security Act money to subsidize federal loans to create, maintain, protect, expand and restore domestic industrial-based capabilities to support the national COVID-19 response.”
According to a recent Reuters article, “the U.S. International Development Finance Corp is talking to companies about reshoring the manufacturing of personal protective equipment, generic drugs and pharmaceutical ingredients. . . .”
Manufacturing Jobs are Headed Back to the U.S.
Bringing jobs back to the U.S. is promising for manufacturing companies, workers and local economies.
It also places further pressure on the existing talent pool. Manufacturers in all industries — defense, automotive, medical and more — are already facing challenges related to recruiting and retaining talent. Retirements, pipeline challenges, and new technology are all impacting the workforce.
In addition, the integration of advanced technology means that upskilling workers is essential to make sure workers can keep up.
So, with the skills gap already pronounced in the U.S., how are companies preparing for this resurgence of production here?
Besides developing strong onboarding programs for surge hiring, more manufacturers are focusing on cross-training to create a flexible workforce.
According to the same SME study, two-in-five respondents (39 percent) indicated that their companies will initiate cross-training to help workers take on new job roles.
This is especially true in the aerospace and defense industries, which are 16 percent and 25 percent, respectively, higher than the study average to do so. Interestingly, companies that have 26 to 100 employees are significantly higher than the study average to initiate cross-training.
As my colleague John Hindman talked about in his recent webinar and blog post, it’s important to cross-train for task and not just job role. Communication with your teams helps ensure that workers see this type of manufacturing training as an opportunity to develop professionally, and not a threat.
Are you considering cross-training? Do you already have a successful program in place? We welcome you to share your experiences.
More insights from the SME 2020 COVID-19 Future Outlook Study are coming in the next weeks.
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