By Harry Moser
One of our main goals at the Reshoring Initiative is to get manufacturers to stop asking, “Where is the cheapest?” and instead start asking, “Where is total profitability highest?” Many offshore decisions have been made—and still are being made—using incomplete cost models. We advocate that companies shift their thinking from “offshoring is cheaper” to “local reduces the total cost of ownership (TCO).”
Building on these insights, the following nine steps provide a practical framework for achieving reshoring success. Let’s dig in.
Step 1: Identify your imported products that have problems or risks
Gather input and suggestions from the team. They know which imported products or components have problems that contribute to:
- Stretched and complicated supply chains
- Geopolitical risk that could threaten a company’s survival
- Excess inventory
- Emergency air freight
- Stockouts and long deliveries
- Quality/rework/warranty issues
- Engineering distance from manufacturing hindering communications
- Delayed product launches
- Intellectual property exposure
- Frequent engineering changes
- Strong regulatory compliance
Step 2: Use TCO to evaluate the suggested products
The choice of where to manufacture is no longer based on cheap labor or price alone but rather on a total cost of ownership (TCO) comparison, followed by investment considerations that improve throughput and narrow or close the cost gap. Start by doing the math correctly using our free online Total Cost of Ownership Estimator.
Reshoring Initiative Insight: In 190 China-versus-U.S. sourcing cases we analyzed, the U.S. win rate jumped from just 8% based on price alone to 32% using TCO. Add a 15% tariff, and the U.S. win rate rises to 46%. But only about 39% of OEMs use TCO, per our 2025 Reshoring Survey.
Step 3: If TCO is within 10%, evaluate automation to improve domestic TCO
- Calculate the productivity improvements needed to get domestic TCO favorable.
- Consider investment in automated systems to narrow or close the cost gap, eliminate bottlenecks, mitigate labor shortages, automate repetitive or dangerous processes and improve delivery.
- Calculate ROI in terms of TCO, not price. Based on a 30% price or manufacturing cost difference, ROI will be negative. Starting with a 5% TCO difference, ROI will probably be attractive. Achieve automation integration. Coordinate machines, software and control systems into one efficient operation.
- Attend trade shows to discover strategic approaches to optimize production processes.
- Reshoring Initiative Insight: Automation, including AI and robotics, helps to close the cost gap compared to competitor countries, enabling more reshoring.
Step 4: Align workforce with any operational changes
Tech-enabled workers will need to work well in tandem with new automated technologies.
- Invest in continuous learning and ensure supervisors are trained and confident on new equipment.
RI Insight: The goal of human-automation collaboration should not be to replace workers but to create a workforce empowered by technology for optimum efficiency.
Step 5: Develop a future-ready manufacturing workforce
A global transformation is underway. A demographic shift is happening due to an aging population, accelerating advanced technology adoption, supply chain restructuring and reshoring due to geopolitics and uncertainty, and an ongoing critical skills shortage.
- Capture exiting institutional knowledge by implementing formal knowledge-transfer programs like structured exit interviews, job shadowing, video capture of critical processes and searchable digital knowledge systems.
- Identify and define future-critical skills.
- Redesign roles for a hybrid workforce.
Step 6: Build a highly skilled workforce pipeline
A giant wave of retirements is expected to leave up to 1.9 million manufacturing jobs unfilled over the next decade, even before the increased demands of continued reshoring.
- Optimize job descriptions for search engines
- Promote success stories to inspire manufacturing careers.
- Consider competitive benefit offerings like apprenticeships, tuition reimbursement and clear career development paths.
- Support diversity, equity and inclusion (DEI) since it continues to be a key influencer for Gen Z (70%) and Millennials (63%).
Step 7: Help your customers decide to reshore
Use TCO to help your B2B customers reevaluate their offshoring and order from you what they have offshored. Partner with your customers to reshore assembly and components.
Step 8: Tie it all together with lean shoring principles
Leanshoring is the operating philosophy that enables other success factors to ensure that domestic production is both competitive and sustainable. By eliminating waste and improving productivity, manufacturers can reduce total costs while increasing resilience.
Step 9: Publicize your reshoring successes
B2C customers will appreciate your reshoring and feel more confident in your support. Your community and employees will appreciate your loyalty and respond in kind.
(Editor’s note: The above article was supplied by The Reshoring Initiative and excerpted from IndustryWeek magazine. It has been edited for style and length.)
