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Offshoring, reshoring and manufacturing: Economist “Special Report”

The often controversial subject of offshoring has found its way back into headlines across the world. However, instead of articles featuring offshoring’s growing prominence in world manufacturing, media outlets are documenting the new trend of offshoring’s waning popularity and the shift towards “reshoring” manufacturing to domestic factories.

One of the most respected and prolific newsmagazines in the world, The Economist, published a special report about this growing trend. The report, called “Here, there and everywhere,” covers a variety of issues related to offshoring and reshoring, and we find it as interesting as it is insightful.

The article is extensive, and we invite you to read as much as you are able because so much of the information directly concerns the future of manufacturing and its relationship to the future of America’s economy. Here’s one passage that really hit home:

Firms are now discovering all the disadvantages of distance. The cost of shipping heavy goods halfway around the world by sea has been rising sharply, and goods spend weeks in transit. They have also found that manufacturing somewhere cheap and far away but keeping research and development at home can have a negative effect on innovation. One answer to this would be to move the R&D too, but that has other drawbacks: the threat of losing valuable intellectual property in far-off places looms ever larger.

In other words, businesses are quickly seeing the advantages of keeping their manufacturing lines and inventory as close to their customers as possible. Not only does returning manufacturing to domestic factories make pragmatic sense by reducing shipping costs and times, but businesses have found that keeping the production lines far away from product development circles stifles the creative process. It’s becoming a lose-lose to send production overseas.

What does this mean for jobs and the American economy? Everything. We wrote awhile back about Apple’s decision to start making Macs in the United States, and while that decision is most likely cosmetic and political, nearly every other company will be making the same decision for practical reasons. It’s simply good business to move production back to domestic factories. The United States could be on the precipice of a manufacturing boom, and those willing to take advantage of the influx of jobs and money could well be on their way to successful and stable careers for decades to come.

Teachers, students, young people, and the United States in general stand to benefit from this new business trend. Education and preparation will be essential to getting the most out of an already positive outlook on our future.

We’ll continue discussing The Economist‘s special report in future blog posts.

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