Reshoring is the returning of the production of goods or services to a company's original country. It is the opposite of offshoring, which is the process of moving the production of goods overseas in order to reduce labor and/or other costs.
Reshoring, along with nearshoring, has become a major trend recently, particularly with regard to manufacturing in China by American and Europe companies. This is mainly because of rapidly rising labor and other costs. Another factor is that in many cases it is now much easier to automate some production processes than it was years ago, thereby reducing the need for labor. In addition, rising transportation costs and growing concern about supply chain stability are also causing manufacturers to reevaluate offshoring.
Even if the costs of domestic manufacturing are higher than offshore production, they can frequently be offset by other advantages, such as the proximity of engineers to the production process, faster shipments to customers and better control over quality. In addition, close proximity and involvement in the manufacturing process can be useful for raising employee skill levels and can also facilitate improvements in the production processes.
There can also be advantages to reshoring that go beyond those to individual companies and extend to the broader community, or to a country, or even to the world as a whole. Perhaps the most important of these is the reduction in air pollution and water pollution from the decrease in international freight transportation. Another is greater national security because of diminished concern about the cutting of supply chains for political reasons or due to natural disasters.