The Re-industrialization of North America: Really “the Next Big Thing”?

The Re-industrialization of North America: Really “the Next Big Thing”?

The term reshoring has been making headlines in U.S. business media, in reference to manufacturing firms moving their production back to North America after a decade of outsourcing to Mexico and Asia. But is it really a trend, or merely a marginal phenomenon?

The new revolution is here—”the next big thing,” as The Economist put it in its special report on the subject from 2013. It’s known as reshoring: the re-industrialization of North America.

The word has been making headlines pretty much weekly in the United States, with reports on American manufacturing firms moving their production back to North America after a decade of outsourcing to Mexico and Asia.

But is this really a trend, or just a marginal occurrence? One thing is certain: Canada has not been following in its southern neighbour’s footsteps.

According to Statistics Canada’s latest Survey of Innovation and Business Strategy, 14 per cent of Canadian businesses outsourced their production in 2012. That’s a 4 percentage point increase from the rate of 10 per cent recorded in 2009.

It seems that businesses are gradually bringing back certain support activities only, such as distribution and logistics. In 2009, 15 per cent of companies were outsourcing their operations to foreign countries. In 2012, the rate dropped to 13 per cent.

If such a trend does exist, it mainly involves small businesses rather than large ones; in 2012, 38 per cent of large businesses had production activities outside Canada versus 22 per cent in 2009. Only medium-sized businesses show a drop in production activities in offshore locations, with 17 per cent in 2009 compared with 14 per cent in 2012.

The data should be interpreted with caution, as it could include reports from companies that have abandoned an offshore location because of the failure of a project and not because of a desire to reshore their operations.

Even in the United States, it might be jumping the gun to officially announce the comeback of “made in the USA.”

In its special report, The Economist specified that fewer than 100 companies have made this move so far, and that many have reshored only a small part of their production destined for the U.S. market, not all of it. “The next big thing”, umm…really?

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Categories Manufacturing, U.S.

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