Navigating Modern Manufacturing: On-Shoring and Near-Shoring in 2024
Economic, geographical, and political factors continue to influence manufacturing strategies related to on-shoring and near-shoring. Different approaches have emerged as businesses look to reduce risk and improve efficiency while maximizing the benefits of the latest USMCA Trade Agreement.
Using our U.S.-based manufacturing, raw material inventory, and overall responsiveness
TFI Custom Fabrication works with businesses across the country, assisting them in improving deliverability and avoiding costly disruptions.
Learn more about how on-shoring and near-shoring continue to improve business practices and how working with TFI Custom Fabrication can help your company stay competitive and timely in these challenging times.
On-Shoring Manufacturing
On-shoring is bringing manufacturing back to a company’s home country to avoid supply chain disruptions and potential international conflicts that can cause delays.
As of 2022, 360,000 manufacturing jobs returned to the U.S., and nearly 400,000 are expected to return in 2023.
Recent Supply Chain Disruptions
There’s a vulnerability in putting all your manufacturing eggs into the international basket. You risk the chance of various disruptions causing delays or, worse yet, the loss of your products.
To avoid shortages of critical components and significantly reduce delays, businesses continue to transfer production domestically. This allows companies to adopt just-in-time inventory practices, reducing the need for extensive warehousing and minimizing the risks of supply chain disruptions. In addition, you enhance supply chain visibility and ensure that companies can meet customer demands more efficiently.
Two recent examples help show why more businesses are investing in American on-shoring.
The Baltimore Bridge Accident
The collapse of the Baltimore Bridge in early 2024 created many logistical problems for businesses. Because of the bridge collapse and the shutdown of the harbor, companies were forced to reroute shipments, leading to delays in production schedules and increased expenses.
As a result, at least 500 companies filed for federal disaster loans, including various supply chain, logistics, and transportation companies that used the port.
California Freighter Backup
Congestion at the major ports across California left numerous cargo ships waiting to unload their shipments. The result was significant delays and additional costs for businesses waiting for their materials to arrive at their facilities.
Increased Fuel Prices
An increase in fuel prices equals an increase in international shipping costs. At some point, the fuel price becomes prohibitive to global manufacturers and incredibly expensive (especially for large, bulky, or heavy items).
By transferring manufacturing back to the United States, businesses mitigate the risk of increasing fuel prices.
3 Reasons Why On-Shoring is Booming in 2024
1. The COVID-19 Pandemic
While on-shoring existed pre-COVID-19, the term grew in popularity and rose exponentially in the years following. Due to travel restrictions and issues with global supply chains, manufacturers wanted to bring production back to the United States for stability and reliability.
2. Consumer Preferences
U.S. consumers’ demand for “Made in the USA” products grew throughout 2023. Because of that, almost ⅔ of American buyers wanted products that said “Made in America” because they believe American-made products are more reliable, stronger, and foster a stronger United States economy.
3. International Politics
Trade wars, tariffs, and geopolitical instabilities have led to more manufacturing jobs in the United States. Tensions between trade partners like the U.S. and China have led to the implementation of tariffs on imported goods, causing companies to rethink their strategies.
Other world events, such as Brexit and the ongoing conflicts in various parts of the world, have made companies wary of the risks of relying on foreign production. Shipping routes interrupted by terrorism or the sudden inability to manufacture products overseas have increased the need for a reliable supply chain.
Near-Shoring Manufacturing
Near-shoring relocates business processes to nearby countries or a supplier closer to your warehouse or production, reducing the physical distance between production and the consumer.
By moving production closer to home, businesses reduce transportation costs, speed up response times, and improve supply chain reliability. There’s suddenly a significant reduction in the dependency on distant production hubs.
By relocating closer to home, companies avoid supply chain disruptions and maintain a more stable production process.
The USMCA Agreement
The 2020 US-Mexico-Canada Agreement (USMCA) incentivized companies to shift their supply chains to North America, further securing supply chain stability.
Increased Regional Value Content Requirements
The USMCA increased the regional value content requirements for products to be considered as made in North America.
For instance, 75% of a vehicle’s components must be manufactured in North America to qualify for tariff-free treatment, up from 62.5% under the previous NAFTA agreement.
Streamlined Customs Procedures
The agreement simplified customs procedures and reduced administrative burdens, facilitating smoother and faster cross-border trade within North America.
This reduction in red tape helps companies maintain efficient supply chains and reduces the costs associated with moving goods across borders.
Impact of Tariffs on China
The USMCA was implemented against the backdrop of the U.S.-China trade war, which saw significant tariffs imposed on Chinese goods.
These tariffs increased the cost of importing from China, making near-shoring to Mexico and Canada a more attractive alternative for many U.S. companies looking to avoid high tariffs and reduce their dependence on Chinese manufacturing.
Successful Near-Shoring Strategies
Several industries have successfully implemented near-shoring strategies, enhancing efficiency and reducing costs.
For example, the automotive industry in Mexico has seen a 13% increase in FDI for car and truck manufacturing.
Similarly, the electronics manufacturing sector has grown by 37% between 2018 and 2023, demonstrating the effectiveness of near-shoring in boosting production capacity and meeting market demands.
Why You Should Work with An American Hook and Loop Fastener Supplier or Fabricator
Working with an American-based hook and loop fastener supplier and custom fabricator lets our customers rest assured that supply chain disruptions, international conflicts, and issues won’t affect their business’s bottom line.
Based out of California, TFI Custom Fabrication works with manufacturers of all industries to ensure that their products are delivered on time and within scope.
Just miles from the border with Mexico, we can also work in conjunction with contract manufacturers and provide the final assembly, packaging, and support from our California factory.
By buying components locally, businesses receive high-quality hook and loop fasteners and custom-fabricated products exactly when needed.
Managed Inventory
Because of our Fabricated in America status, our teams synchronize production schedules with demand, reducing the need for extensive warehousing.
TFI’s General Manager explains, “Our manufacturing process aims to minimize inventory levels by producing goods only as needed, but some minimal inventory may still be maintained for smooth operations and unexpected circumstances.”
Greater Visibility and Reliability Over Your Supply Chain
Larger OEMs understand the total cost of acquisition. This cost goes beyond the price listed on a quote from a supplier by considering savings by not having to constantly check in on the whereabouts of the goods in transit. Every time you need to locate where your products are on the water, the status of goods in port or customs is valuable time that could be spent on more meaningful endeavors. Put simply- that’s a waste of your time.
Working with TFI gives Buyers and Procurement Departments complete visibility over your supply chain. This visibility lets you know how long something might take and where exactly production is.
This transparency allows for better planning and forecasting, reducing the risk of unexpected delays and stockouts. Businesses now experience fewer disruptions in their operations due to precise and predictable supply chain activities, translating into better customer satisfaction and timely delivery of hook and loop fasteners and the products we make using them.
Now is the Time to Reach Out to TFI Custom Fabrication
With the current shifts in manufacturing strategies towards on-shoring and near-shoring, there has never been a better time to optimize your supply chain by partnering with a reliable American-based supplier like TFI Custom Fabrication.
Here’s why we think now is the best time to reach out to one of our team members:
Enhanced Supply Chain Stability
Partnering with TFI Custom Fabrication helps mitigate supply chain disruptions and ensures a more stable and predictable supply chain.
Our U.S.-based operations reduce the chances of delays caused by international conflicts, shipping bottlenecks, and geopolitical uncertainties.
Cost-Effective and Timely Delivery
Shipping costs have skyrocketed, especially for goods coming from Asia.
The cost to ship a 40-foot container from China to the West Coast can reach $15,000 while shipping the same container from Mexico costs significantly less at around $2,480-$2,742.
TFI Custom Fabrication’s proximity allows for lower transportation costs and quicker delivery times, ensuring your products arrive on time and within budget.
Support for Domestic Manufacturing
Nearly two-thirds of American buyers prefer products manufactured domestically, associating them with higher quality and supporting the local economy.
By choosing TFI Custom Fabrication, you align with this growing consumer trend, enhancing your brand’s appeal and marketability.
Compliance with USMCA Standards
Working with TFI Custom Fabrication helps you take advantage of the USMCA benefits, which include reduced tariffs and smoother cross-border trade.
Just-In-Time Inventory Management
Our expertise in Just-In-Time (JIT) inventory management means you receive goods only as needed, reducing holding costs and improving cash flow.
Greater Visibility and Control
Working with TFI Custom Fabrication gives you real-time insights into production status, allowing for better planning and forecasting. Reduce the risk of stockouts and ensure timely delivery of your products with our U.S.-based manufacturing.
Ready to Work with TFI Custom Fabrication?
TFI Custom Fabrication is your reliable partner dedicated to helping you navigate the complexities of modern supply chain management. Contact us today to learn how we can support your manufacturing needs and drive your business forward.
