Inside Logistics

Reshoring likely to emerge as post-Covid trend

April survey shows most manufacturers affected by pandemic and many are contemplating moving production home


May 12, 2020
by

NEW YORK – Almost two thirds of North American manufacturers are contemplating reshoring manufacturing and sourcing as a result of the Covid-19 pandemic.

Of those, about 20 percent say they are extremely likely to move production back to North America.

A new survey of 1,000 North American manufacturing and industrial suppliers also shows that one in four manufacturers is considering expanding industrial automation as a result of COVID-19, while an additional 20 percent report they already have systems in place.

While 41 percent of manufacturers are predicting a decrease in demand as a result of the outbreak, 91 percent are confident that the sector as a whole will recover. Disruption in international markets has already caused a decrease in demand across all sectors, with about two thirds saying demand is down.

The main disruptions experienced are decline in demand (cited by 24 percent), disrupted cash flow (18 percent), fluctuation in supply of materials and services (15 percent), disruptions in transport and logistics, (13 percent) and staffing issues (11 percent).

More than half (56 percent) of manufacturing companies have not laid off employees due to COVID-19, and 30 percent of companies are actively hiring.

The top sectors reporting being affected by shutdown orders are transportation (77 percent), automotive (75 percent), construction (70 percent), and agricultural (69 percent).

In order to stabilize supply and keep production on schedule, manufacturers reported the most vital items to be personal protective equipment (42 percent), metals (37 percent), fabricated materials (29 percent), and machining tools and parts (27 percent).

“The COVID-19 pandemic will fundamentally redefine how industrial companies approach their supply chains and will further advance the digital transformation of manufacturing. By embracing real-time resource management, redundancy, reshoring, and the convergence between the digital and physical supply chains, manufacturers will come out of this crisis even stronger than they were before,” said Tony Uphoff, president and CEO of Thomas, which produced the survey.