A recent report shows that, after years of contemplating the possibility, American manufacturers are finally shifting away supply and manufacturing lines from countries such as China and bringing them back to the United States.
Keep reading to learn more about the reasons behind this phenomenon and its impact on the commercial real estate industry.
US Manufacturers Are Reshoring Their Production Lines
According to a report released last Wednesday by professional services network Deloitte, about 62% of manufacturers have started the process of reshoring or near-shoring their production capacities.
The study included 305 executives at transport and manufacturing enterprises, the majority of which are American.
Deloitte notes that “American companies are expected to reshore nearly 350,000 jobs in 2022, up from 260,000 in 2021.”
This is good news for American workers, but also for the American commercial real estate industry. The report points out that, as a result of the reshoring process, automobile and electronic manufacturers are planning to build costly facilities in order to manufacture their products in the United States.
In addition to reshoring, companies are also considering near-shoring, which can be defined as the process of moving manufacturing closer to the end consumer. For American companies, this might mean shifting production capabilities away from Asian countries toward Canada or Latin American countries.
The Factors Favoring Reshoring
As for the factors that are contributing to a gradual reversal of the previous wave of offshoring, the report explains that labor availability and manufacturing costs are being mitigated by advances in robotics and automation, eliminating two of the most powerful reasons companies cited in the past for shifting their production lines overseas.
A third contributing factor is the pandemic. The supply chain issues that most industries experienced over the last months have created a new awareness among executives of the importance of a more distributed sourcing configuration.
Disclaimer: This material is for general information and educational purposes only. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.
SoCal CRE Team: The Experts in Southern California Commercial Real Estate
At SoCal CRE Team, we specialize in commercial real estate solutions for developers, investors, landlords, and tenants in the most sought-after Southern California markets such as Los Angeles, Orange County, Riverside, Anaheim, and more.
Interested in learning more? Contact us today by telephone (714) 456-0500 or email at gary@ashwillassociates.com.
