If Factories Don't Return to US Now, They Never Will

The Chips and Science Act that President Biden signed earlier this month is just the latest indication that the planets are aligning for a return of manufacturing to the US. Proponents have pushed for so-called reshoring for years, but it has never quite panned out. With the supply chain crisis still fresh in people’s memories, this time is different. If reshoring doesn’t become a significant trend over the next decade, it never will. To ensure this return of production isn’t haphazard and doesn’t leave gaping holes in the supply chain, there needs to be some coordination — and it doesn’t have to be by the government.

“Resiliency” is the buzzword making the rounds at corporate boards. This is a direct reaction to supply chains that broke down during the pandemic and injected a nasty bout of inflation into worldwide economies. When examining the root causes of the breakdown, it should lead to the conclusion that industrial production — just like the food at a restaurant — is much better when it’s made locally for the local market.

“Making your product closer to your customer is a very good thing in terms of removing some of the unknowns from your supply chain,” said Daniel Swan, co-leader of McKinsey & Co.’s operations practice. “I think this is going to be something very real.”