How can AI help reshoring manufacturing to the US? Reshoring has become a prominent trend in recent years, but cost-effectiveness and labour shortages are major hurdles to overcome.
From offshoring to reshoring: the reasons why
The return to local production is driven by several reasons. Remember the supply chain disruptions during the covid pandemic? They revealed the risks of US reliance on offshore production – from lumber to computer chips.
Supply chain resiliency is one motivation for reshoring, but geopolitical tensions are obviously another factor why companies move their manufacturing operations back to the US. It helps them shorten the supply chain and reduces dependency on overseas production.
On the positive side, local production is also a way to regain proximity to your customers and markets, to create synergies and have a positive impact on the nation’s economy. In fact, it is even much more sustainable, given the reduction in transport and hence the carbon footprint
Challenges for reshoring manufacturing
However, let’s not forget that industries initially outsourced to low labour cost countries in order to minimise production expenses. If reshoring drives labour costs back up, local production becomes a lot less attractive.
Another huge challenge is today’s labour shortage in the US. It is affecting every industry, but the manufacturing industry is hit the hardest, with a shortage of nearly 600,000 stable manufacturing jobs across the country.
AI as an enabler for advanced industrial automation
Advanced automation is the best solution, both for cost control and the shortage of skilled labour. Manufacturing companies that rely on AI-driven automation can bring production back to the US while maintaining cost-effectiveness and reducing labour costs.
Smart factories make use of robotics and deep learning algorithms to automate tasks and augment human capabilities. They continuously optimise processes and efficiency, reducing reliance on manual labour. This enables them to maximise productivity, minimise downtime, and ensure consistent quality standards. Moreover, AI-powered automation can speed up innovation and drive long-term competitiveness in the US manufacturing market.
Government support for reshoring
Reshoring thus delivers clear benefits for the US economy. No wonder the American government is even powering the trend by several supporting initiatives like the US Chips Act, providing funds to support the domestic production of semiconductors and authorising various programs and activities of the federal science agencies. Such government initiatives play a pivotal role in supporting reshoring efforts and revitalising domestic industries.
Opportunities for growth
In conclusion, while labour shortages are challenging reshoring efforts, AI-driven automation offers a way out for manufacturing companies looking to improve their competitiveness and resilience in the US market. By embracing the power of AI technologies and engaging in strategic technology partnerships, they can overcome labour-related hurdles and access new opportunities for growth.