The trend towards more nearshoring to ease global supply chain chaos is not new, but it is becoming increasingly important, according to Deloitte Vice Chairman of US Industrial Products & Construction Leader Paul Wellener.
Nearshoring means “bringing things closer to the market or bringing things back to the US market. And these were trends that started way before the pandemic started and really changed the way we think about supply chains,” Wellener told Yahoo Finance (video above). ).
The trend “started even about a decade ago when we had the Fukushima nuclear accident” and “problems with tariffs over the years,” he explained. Combined with other pandemic “weather-related disruptions” and “the war in Russia and Ukraine,” it’s clear manufacturers are looking to reduce foreign dependency once again.
“Right now there are a lot of things that have disrupted the supply chain,” added Wellener. “So manufacturers think about it: how do they mitigate the risk?”
One way companies are trying to mitigate risk is by “bringing things back to where they have a little bit more control over the supply chain, so bring some of those things on shore,” the executive added.
A truck transports a shipping container at the Port of Long Beach on January 11, 2022 in Long Beach, California. (Photo by Patrick T. FALLON/AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images)
But nearshoring has its limitations: Drawbacks could include exacerbating the great American problem “related to the number of jobs we have to fill here in the US,” according to research from Deloitte and The Manufacturing Institute In 2030 there will be as many as 2.1 million manufacturing jobs will remain unfilled, costing the US economy up to $1 trillion.
However, Wellener noted that nearshoring “can offer a lot of security to a lot of organizations that are bringing those jobs back to the home market.” In addition, Wellener added, the Deloitte study showed that “perceptions of manufacturing are much more positive than they have been in the last five years.”
The story goes on
The new report found that “over 64% of the population finds manufacturing attractive,” he explained, while “parents’ influence on children entering manufacturing has become much more positive over the past five years, by almost 50%.”
Equally important is the skills gap, particularly in manufacturing where it has a massive negative impact.
“It’s not a peanut butter solution that we can distribute across the country to create the right skills in the right niches in manufacturing,” said Wellener. “Because if you’re in a semiconductor fab outside of Columbus, Ohio, or in a steel plant outside of Chicago, or in an automotive assembly plant in the Southeast, you need a lot of different things from a capability perspective.”
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv
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