Supply chain disruptions over the past few years have been a wake-up call for businesses everywhere. Port backlogs, shipping delays, and geopolitical tensions exposed just how vulnerable extended supply chains can be—and how much they can cost your business when things go wrong.
The solution many companies are turning to? Bringing manufacturing back home.
Reshoring—the practice of moving production operations from overseas back to domestic markets—is gaining serious momentum. It’s not just about patriotism or politics. Smart business leaders are discovering that domestic manufacturing can actually deliver better total costs, faster response times, and dramatically reduced risk.
This guide breaks down everything you need to know about reshoring: what it is, why it’s taking off now, and most importantly, how to evaluate whether it makes sense for your business. You’ll get a practical framework you can use to analyze your own operations, plus real examples from companies that have made the move successfully.
What you’ll learn
The precise definition of reshoring and how it differs from offshoring and nearshoring
The key economic, political, and technological forces driving the reshoring trend
The tangible benefits and potential challenges of bringing production back home
A step-by-step framework for evaluating a reshoring initiative
Real-world examples of successful reshoring projects
TL;DR:
Key takeaways
Reshoring is a strategic reversal of offshoring aimed at improving supply chain resilience
Government incentives and automation are making reshoring more financially viable
A successful reshoring strategy requires careful analysis of Total Cost of Ownership (TCO), not just labor costs
Reshoring definition
Reshoring is the practice of bringing manufacturing and production operations from overseas back to the home country. The goal is to cut lead times, improve quality control, reduce geopolitical risk, and often save on total costs once tariffs, shipping, and advanced manufacturing technologies are factored in.
This strategic decision represents more than just a location change—it’s the reversal of a previous decision to move operations overseas, designed to bring production closer to end customers and regain control over critical manufacturing processes. Companies pursuing this strategy recognize that the economics of manufacturing have shifted significantly since many original decisions to move production overseas were made decades ago.
PRO TIP: When evaluating reshoring opportunities, focus on Total Cost of Ownership rather than just comparing wage rates. Hidden costs like quality issues, shipping delays, and inventory carrying costs often make domestic production more competitive than initial calculations suggest.
Reshoring vs. onshoring
While the terms “reshoring” and “onshoring” are often used interchangeably, reshoring specifically implies a return of operations that were previously moved to other countries. Onshoring can also refer to establishing new domestic operations from scratch, without any prior activity in other regions.
Reshoring vs. offshoring vs. nearshoring
Understanding the distinct characteristics of each sourcing strategy helps clarify when reshoring makes the most strategic sense for your business.
Comparing sourcing strategies
Each approach represents a different balance of cost, risk, and operational control:
| Feature | Reshoring | Offshoring | Nearshoring |
|---|---|---|---|
| Location | Domestic (home country) | Distant foreign country | Neighboring/nearby country |
| Primary cost driver | Total cost of ownership (TCO), technology | Low wages | Balance of wages & logistics |
| Lead times | Shortest | Longest | Medium |
| Geopolitical risk | Low | High | Medium |
| IP control | Highest | Lowest | Medium |
When each strategy makes sense
Moving production to distant countries remains attractive for mass-produced, standardized goods where minimizing direct manufacturing costs takes priority over other considerations. Companies pursuing this strategy typically have predictable demand patterns and can absorb longer lead times.
Nearshoring offers a middle ground, reducing lead times and geopolitical risks compared to distant production while maintaining lower wages than domestic options. This approach works well for companies that need some cost savings but require more supply chain agility.
NOTE: Nearshoring has gained significant momentum as companies seek to balance cost efficiency with supply chain resilience, particularly in industries where speed-to-market is critical.
Reshoring makes the most sense for high-value or complex goods where supply chain resilience, quality control, and speed-to-market outweigh the appeal of rock-bottom wages. Companies choosing this path often serve markets that value domestic production or face significant technology opportunities.
Why is reshoring growing now?
Multiple converging forces have made reshoring more attractive and financially viable than it has been in decades. The combination of policy support, risk awareness, and technological advancement has created an unprecedented opportunity for companies to reconsider their manufacturing footprint.
Policy incentives
Recent legislation has created unprecedented support for domestic manufacturing. The CHIPS Act has already spurred over $395 billion in private semiconductor investments, demonstrating how targeted policy can accelerate reshoring decisions. These incentives fundamentally alter the financial calculations that originally drove companies to move production overseas.
Beyond semiconductors, these incentives extend across multiple sectors. Tax credits, grants, and loan guarantees are now available for everything from electric vehicle batteries to medical device manufacturing, creating new economic opportunities for domestic production that didn’t exist even five years ago.
Geopolitical and supply chain risk
Global events have exposed the vulnerability of extended supply chains in dramatic fashion. Research shows that significant supply chain problems can cost companies up to 45% of one year’s profits over a decade. This stark reality has prompted executives to view reshoring as essential insurance against future problems.
ALERT: Companies relying heavily on single-source suppliers in distant countries face concentrated risk. Diversifying your network or reshoring critical components can provide crucial operational flexibility during global crises.
The Ukraine conflict, port congestion, and trade tensions have all reinforced that extended supply chains carry inherent political and logistical risks that domestic production can help mitigate. Companies are increasingly willing to pay a premium for supply chain security and operational control.
Technology and Industry 4.0 economics
Advanced manufacturing technologies are fundamentally changing the wage equation. Robotics, artificial intelligence, and systems can help domestic facilities compete more effectively, making the Total Cost of Ownership competitive with alternatives from other countries.
This technological shift means that decisions no longer hinge solely on wage arbitrage. Instead, companies can leverage modern manufacturing to achieve both cost competitiveness and operational advantages that distant locations cannot match. The result is a new manufacturing paradigm where proximity, control, and technology create value that transcends simple cost comparisons.
Key benefits of reshoring
Bringing production home delivers measurable advantages across multiple dimensions of business performance, creating value that extends far beyond simple cost calculations.
Improved supply chain resilience: Shorter supply chains prove far less vulnerable to global problems, port delays, and transportation bottlenecks. Companies can respond more quickly to demand changes and avoid the inventory buffers required for long-distance sourcing. This agility becomes increasingly valuable in volatile markets where customer demands shift rapidly.
Enhanced quality control and collaboration: Physical proximity between R&D and production teams enables faster iteration cycles, immediate problem-solving, and more effective process improvements. Engineering changes that might take weeks to communicate internationally can be implemented within hours domestically. Teams can implement modifications and test results in real-time rather than waiting for lengthy communication cycles.
Stronger intellectual property protection: Keeping sensitive designs and processes within the home country’s legal framework significantly reduces IP theft risk and provides better legal recourse if violations occur. This protection becomes particularly valuable for companies developing proprietary technologies or processes that represent core competitive advantages.
PRO TIP: When evaluating reshoring options, factor in the value of protecting proprietary processes and trade secrets. The cost of IP theft often far exceeds any wage savings from distant production.
Reduced lead times and shipping costs: Domestic production dramatically cuts time-to-market while eliminating exposure to volatile international freight rates and port congestion. Companies can respond to market opportunities faster and reduce the working capital tied up in inventory buffers required for long supply chains.
Positive brand impact and ESG benefits: “Made in USA” messaging resonates strongly with consumers, while shorter shipping routes reduce carbon footprints. The Inflation Reduction Act provides over $40 billion in tax credits for clean energy manufacturing, aligning reshoring with sustainability goals and creating additional financial incentives.
Domestic job creation: Supporting local employment contributes directly to community economic development and can enhance your company’s social license to operate. This benefit often translates into stronger relationships with local governments and communities, creating additional business advantages.
Potential challenges and how to mitigate them
Reshoring presents real obstacles that require strategic planning and risk mitigation. Understanding these challenges upfront allows companies to develop effective strategies for overcoming them.
Higher initial costs
Domestic wages and capital expenditures typically exceed alternatives from other countries. U.S. manufacturing costs can be 10-50% higher than options from other regions, making technology adoption and government incentives critical success factors.
Mitigation: Focus your analysis on Total Cost of Ownership rather than just wage rates. Include shipping costs, quality issues, inventory carrying costs, and risk factors in your calculations. Many companies discover that true costs from distant locations approach domestic levels once all factors are considered.
Network gaps
Years of moving production overseas may have weakened the domestic network for certain components or materials. Finding qualified local sources can require significant effort and relationship building.
Mitigation: Start building relationships early in your planning process. Consider working with a logistics partner that provides comprehensive 3PL services to manage inventory from a newly developed network of domestic sources.
ALERT: Don’t underestimate the time required to qualify new domestic sources. Begin this process 6-12 months before you need production capacity to avoid delays.
Skilled workforce shortages
Finding workers with specific manufacturing skills presents a significant challenge, with 70% of Chief Procurement Officers reporting talent acquisition difficulties.
Mitigation: Partner with community colleges and technical schools to develop training programs. Implement comprehensive upskilling programs for existing workers and consider offering competitive compensation packages to attract experienced talent from other regions.
Step-by-step reshoring framework
Use this systematic approach to evaluate and execute your reshoring initiative:
Feasibility and Total Cost of Ownership (TCO) analysis
01
Begin with a comprehensive financial analysis that goes beyond simple wage comparisons. Include shipping expenses, tariffs, inventory carrying costs, quality-related expenses, and IP protection value. Factor in technology opportunities that can help domestic facilities compete more effectively.
Supply chain and network mapping
02
Evaluate potential domestic sources and design new material flows. This process involves assessing capabilities, capacity, quality standards, and pricing. Map out the entire network to identify potential bottlenecks or gaps.
Site selection and incentive negotiation
03
Research locations based on workforce availability, logistics infrastructure, and state/local incentives. Many states offer significant tax breaks, grants, and other benefits for manufacturing operations. Compare total landed costs across multiple potential sites.
Technology rollout
04
Design your new facility with modern systems to ensure cost competitiveness. This investment is often essential for making domestic production economically viable while improving quality and consistency.
READ MORE: For detailed insights on modern manufacturing technologies, see our guide to warehouse automation.
Logistics and fulfillment strategy
05
Once products are manufactured domestically, plan storage, management, and shipping operations. The critical decision becomes how to choose a 3PL that can handle your new domestic production volume effectively. Companies bringing back larger items should prioritize finding partners specializing in fulfillment for big and heavy products.
Pilot run and phased scaling
06
Start with one product line to reduce transition risk and validate your assumptions. Some 3PLs offer value-added kitting and assembly services that can further streamline your new domestic operations.
Monitor performance metrics closely during the pilot phase and make adjustments before scaling to full production.
Performance monitoring and optimization
07
Establish key performance indicators for quality, cost, delivery, and customer satisfaction. Regular monitoring ensures your reshoring initiative delivers expected benefits and identifies opportunities for continuous improvement.
Real-world examples
Major companies across industries are successfully implementing reshoring strategies:
GE appliances
The company invested $490 million in its Louisville, KY, facilities, creating 800 new jobs to produce laundry units domestically. This move reduced lead times and improved quality control while supporting American manufacturing jobs.
Intel and TSMC
Driven by the CHIPS Act, Intel is investing over $100 billion in new U.S. chip plants, expected to create 10,000 manufacturing jobs. This massive investment demonstrates how policy incentives can accelerate strategic reshoring decisions.
General Motors
GM’s electric vehicle battery production plans illustrate both opportunities and complexities in reshoring. Partnership changes and joint venture restructuring highlight the importance of careful relationship management in reshoring initiatives.
NOTE: These examples show that successful reshoring requires significant capital investment but can deliver substantial long-term benefits in terms of supply chain control and market responsiveness.
Frequently asked questions
Which industries are leading the trend the most?
Industries like semiconductors, electric vehicles, medical supplies, and appliances are leading efforts, often driven by government incentives and supply chain security needs.
Does it guarantee lower costs?
Not necessarily. While it can reduce shipping and tariff costs, domestic wages and setup costs are often higher. The goal is achieving lower Total Cost of Ownership and reduced risk, not just lower wages.
Is it the same as onshoring?
The terms are often used interchangeably. However, it specifically refers to bringing back operations that were previously moved to other countries, while onshoring can also refer to setting up new domestic operations from scratch.
Next steps and resources
This strategy represents a powerful option for building more resilient and competitive operations. Success requires careful analysis of Total Cost of Ownership, strategic planning, and phased implementation.
As you evaluate the financial case, understanding 3PL pricing becomes a critical component of your Total Cost of Ownership calculations.
If you’re considering this strategy and need a world-class logistics partner to manage your new domestic fulfillment operations, contact our experts today to learn how we can support your success.
Citations
1. “Leveraging Digital Tools in the Age of Supply Chain Disruption.” World Economic Forum, 9 Jan. 2025, https://www.weforum.org/supply-chain-disruption-digital-winners-losers.
2. “Deloitte’s 2023 Global Chief Procurement Officer Survey.” Deloitte, Jul 2023, https://procurementandsupply.com/talent-acquisition-headaches-for-cpos-deloittes-2023-global-survey-reveals/.
3. “McKinsey Global Supply Chain Leader Survey 2024.” McKinsey & Company, 14 Oct. 2024, https://www.mckinsey.com/capabilities/operations/our-insights/supply-chain-risk-survey.
4. “Supply Chain Resilience.” Deloitte Insights, 23 May 2024, https://www.deloitte.com/us/en/insights/industry/manufacturing-industrial-products/global-supply-chain-resilience-amid-disruptions.html.
5. “Pivotal Clean Manufacturing Investments in the Inflation Reduction Act.” Blue Green Alliance, Aug 2022, https://www.bluegreenalliance.org/wp-content/uploads/2022/08/BGA-IRA-Manufacturing-Investments-Factsheet-82422-FINAL.pdf.
6. “Reshoring Progress in 2024, Risks for 2025.” American Machinist, 10 Jun. 2025, https://americanmachinist.com/news/article/55296323/reshoring-report-shows-progress-and-risks-reshoring-initiative.
7. “Gov. Beshear: GE Appliances Invests $490M.” KY AFL-CIO, 26 Jun. 2025, https://ky.aflcio.org/news/gov-beshear-ge-appliances-invest-490-million-create-800-full-time-jobs.
8. “U.S. Awards Intel Largest CHIPS Grant.” NAM, 21 Mar. 2024, https://nam.org/u-s-awards-intel-largest-chips-grant-30521/.
9. “GM No Longer Attributable for Lansing Battery Plant.” GMAuthority, 25 Mar. 2025, https://gmauthority.com/blog/2025/03/gm-no-longer-attributable-for-lansing-battery-plant-job-creation/
