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KSM Blog | Katz, Sapper & Miller CPA

The Trend Toward Local-for-Local Manufacturing

Posted 4:00 AM by

Local-for-Local Manufacturing

Reshoring manufacturing jobs back to the United States has been a hot topic in the industry for the past few years. The question is, why should your company consider it? Some might argue that it’s a matter of patriotism; others argue it’s a simple matter of economics – manufacturers want to bring production closer to the actual consumers of their products. 

Material Handling & Logistics’ author Pierfrancesco Manenti, VP of research at SCM World, believes the former. Manenti says the time is perfect for this transition, as labor costs – historically the driving force behind off-shoring – have risen rapidly over the past few years in traditionally low-cost countries, and there have been significant strides in automation technologies in the United States, which helps to lower costs domestically or near-domestically.

With labor costs no longer providing a strong business case for off-shoring, manufacturers are beginning to focus more on issues related to customer service, including response time and agility. These considerations are leading to re-shoring, and are cause for many manufacturers to consider local-for-local manufacturing.

Under local-for-local manufacturing, sites are selected based upon geography so that a production facility can better serve a specific region of the company’s customer base. As such, more facilities might be utilized for production as opposed to having a single larger facility for all production. Companies are then able to secure short lead times and provide better customer service.

It remains to be seen whether the local-for-local trend will stick around long-term, but it’s certainly an economically viable contender in the world of manufacturing strategies.

About the Author
Justin Hayes is a director in Katz, Sapper & Miller’s Audit and Assurance Services Group. Justin works with clients to help ensure accurate financial reporting, keeping an eye on their bottom line, helping them avoid risk and maximize efficiencies. Connect with him on LinkedIn.

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