ABSTRACT
Some companies have already begun the reshoring process. They have restored production to the United States after some experience with offshoring. As with many things in life, the reasons are not always simple. Many things change over time, including the market, delivery expectations, quality demands, shipping costs, currency exchange rates, and labor rates. Some companies have learned that offshored production causes more internal headaches than they anticipated, and some have seen hidden costs become obvious. For example, ET Water Systems, a small California company that manufactures irrigation equipment, offshored its production as part of the groundswell of companies moving production for lower costs. In only 5 years it learned that money tied up in lengthy shipment was costly, innovation and quality suffered from the disconnect between production and engineering, and total costs approached those of producing domestically. This chapter examines five companies that have tasted the offshoring Kool-Aid and have decided to bring production back to the United States
A 2010 announcement of a $120 million new plant construction in Victoria, Texas, warmed the hearts of many Texans and reshoring fans in general. Potential new employment was 500 jobs! Interestingly, this was not moving production from China, where one might guess, but rather from Japan. Nonetheless, Caterpillar determined that hydraulic excavators being sold
in the United States could be competitively manufactured domestically. A similar plant in China, making the same type of equipment, was planned to continue production for that market. In fact, plans included increasing production at that plant to meet the growing local demands.1 Considering the size and complexity of Caterpillar products, it makes sense even to outsiders that production best occurs near the intended market.
