Lisa Anderson, a supply chain expert and president of California-based LMA Consulting Group, says that the Chips Act “has spurred on certainly quite a bit of investment” in the US electric car sector. And Mexico is also booming through ‘friend shoring’.
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Why firms are bringing their manufacturing back home
Reshoring is when a company decides to stop getting its manufacturing done overseas, such as in China, and instead returns the work to its home country.
We have all heard of offshoring, which started as a major economic movement in the 1990s, when companies started to relocate their manufacturing abroad. They more often went to China, where incentives from the Chinese government were generous, and the workers were cheap.
The result was a Chinese manufacturing boom, and a long supply chain from Europe and the US to China and beyond.
But now the West is fighting back, with an increasing trend towards reshoring. More than half of UK manufacturers are now reshoring, according to one study at the start of this year.
Other firms are “near shoring”, which means that while they are still getting their manufacturing done overseas, they are moving it to a nearer country.
And then there is so-called “friend shoring”, whereby you keep your manufacturing abroad, but move it to a country that has friendlier relationships with your own. Apple is said to be doing this, as it increasingly moves production from China to India.
… western governments have become increasingly aware that they are becoming dependent on potential enemy nations for their cutting-edge technology and supplies.
In America Presidents Biden and Trump have tried to address this issue, President Trump with tariffs, and President Biden with financial incentives. Mr Biden has been throwing hundreds of billions of dollars at making American industry make things in the US, especially microchips via the 2022 Chips Act. This pledged $52bn (£41bn) to boost domestic production of computer chips.
The Biden administration is also giving $15.5bn to the US electric car sector.
And it is not just American workers who are benefitting from US firms bringing manufacturing closer to home. Mexico is also booming, says Ms Anderson, who points out that America’s southern neighbour now exports more goods to the US than China.
Read the full article at the BBC website.