Could Wyoming Benefit from the Onshoring Trend?
Wednesday, September 09, 2020
The Site Selectors Guild conducted a survey of members where they found a clear uptick in onshoring demand among manufacturing companies. Though COVID-19 has brought much bad news, this could be the silver lining. “While none of us have a crystal ball, our 50 members represent the nexus between communities and corporations,” said Rick Weddle, president and CEO of the Site Selectors Guild. “This survey gives us a sense for what site selectors are seeing from their corporate clients, and a glimpse into what we might expect coming out of this crisis.”
Their main findings were that supply chains will be regionalized in the wake of COVID-19, with a major impact on the global supply chain strategies that have been in place for decades. According to the survey, “Members pointed out that the previous focus on the lowest cost scenario, which led to growth in China and Southeast Asia, will now become more balanced as companies look to reduce risk. This could benefit North American locations as more companies look to locate production facilities close to the customers they serve and increase redundancy. Many Guild members predict an uptick in on-shoring to the United States, Canada and Mexico – especially in the pharma and life sciences industries.”
Could this be the opportunity many Wyoming communities have been looking for?
We think so. Wyoming has a lot to offer manufacturing companies who are searching for a U.S. location that is affordable and offers low energy costs - something Wyoming is known for. Simultaneously, Wyoming offers another advantage that has been amplified by COVID-19 - our remoteness. The simple truth is that Wyoming was not impacted by COVID-19 like more populated states were. Yes, the pandemic did reach us but the numbers were small and it was easier to implement social distancing measures since our communities aren’t crowded to begin with.
Why companies are looking to onshore
To better understand this opportunity, community leaders need to consider why businesses are looking to onshore in the first place. Business executives have watched their supply chains be disrupted and product deliveries delayed to COVID-19. 60% of U.S. manufacturing companies surveyed by Thomas reported COVID-19 business disruptions, so this is a widespread issue impacting virtually all industries.
Onshoring is the logical solution to reducing the risk of future disruptions and delays, at least in part. Though companies may not be looking to move their entire operations back to the United States, opening U.S. manufacturing facilities as part of their global operations certainly is. In addition to companies onshoring directly, 28% of suppliers surveyed reported that they are seeking domestic sources. This will create expansion opportunities for current U.S. manufacturers.
Political pressure is also being placed on companies. With executive orders issued in August that require the procurement of PPE, medical supplies and drugs from U.S. manufacturers, there is an additional and immediate need to bring more manufacturing back home. The executive order states the following:
“It is critical that we reduce our dependence on foreign manufacturers for Essential Medicines, Medical Countermeasures, and Critical Inputs to ensure sufficient and reliable long-term domestic production of these products, to minimize potential shortages, and to mobilize our Nation’s Public Health Industrial Base to respond to these threats. It is therefore the policy of the United States to:
(a) accelerate the development of cost-effective and efficient domestic production of Essential Medicines and Medical Countermeasures and have adequate redundancy built into the domestic supply chain for Essential Medicines, Medical Countermeasures, and Critical Inputs;
(b) ensure long-term demand for Essential Medicines, Medical Countermeasures, and Critical Inputs that are produced in the United States;
(c) create, maintain, and maximize domestic production capabilities for Critical Inputs, Finished Drug Products, and Finished Devices that are essential to protect public safety and human health and to provide for the national defense ...
As a result, agencies must start looking at ways to procure these items within the U.S. starting 90 days from the date the order was issued. Medical supply companies within the U.S. stand to benefit and it is likely that some companies will move operations into the country in order to remain a viable option. Wyoming can support that growth.
Economic developers should get ready
The process of finding a site, obtaining permits, constructing a facility, hiring and training a workforce can be daunting. Economic developers must be prepared to offer fast assistance to site selectors and executives looking to make location decisions.
Read more: Economic Developers: Follow these steps to prepare for site selector requests
Resources and Further Reading