Near-shoring: an important, if not urgent, trend

Decades ago, when the trend toward offshore manufacturing first took off, U.S.-based companies that didn’t adapt quickly enough were left behind, edged out of the marketplace by their own overhead.

And as controversial as it was, the trend seemed irreversible. Over the past few years, though, the advantages of outsourcing have been tempered by supply chain challenges including long lead times, increased international risk, and concerns about carbon emissions, fuel prices, and the rising cost of labor in Asia. 

All of these concerns have helped drive the emergence of near-shoring or bringing manufacturing closer to home. By leveraging the geographical proximity and cultural consonance of Latin American countries, as well as their affordable, skilled, and increasingly English-speaking work forces, companies are improving speed to market, and responsiveness to customers — while, once again, reducing costs.

And though the advantages are great and the trend important, it hasn’t caused companies to shut down their Asian operations en masse. Because in many ways, near-shoring isn’t just about proximity to the mother company; it’s also about proximity to the customer. And as Asia’s prominence wanes as an offshore manufacturing base, the region continues to gain importance … this time as a consumer base.  It is important that our expectations and our government policies reflect this new reality.