Onshoring: A Trend in Automation?

Last quarter, when Apple CEO Tim Cook announced that his company would invest $100 million in US manufacturing, Simon Grant, president and CEO of Automation GT, said the announcement provided a high-profile example of the recent onshoring trend, which is predicted by some to be at the forefront of company agendas throughout 2013.

According to Grant, the onshoring movement of returning outsourced manufacturing back to the US began with labor issues in China. China's low labor costs once compelled companies to outsource production abroad. Today, wages are five times higher than they were 12 years ago, and are estimated to continue rising at 18 percent a year, according to a recent article in the Huffington Post.

Companies were also prompted to reconsider the benefits of offshoring when Chinese workers began to resist poor labor conditions in the form of strikes and suicides. The problem became serious enough for the contract electronics assembler Foxconn Technology Group to begin automating its operations in China.

The cover story in the December issue of The Atlantic, "Why The Future of Industry Is In America," reported that US manufacturing is on the edge of a major resurgence as companies bring work back from China and other foreign countries.

Automation GT's Grant believes that operating automation abroad is no more effective than operating automation in the US, and for companies wishing to onshore production, automated robotics will play a key role. "We've seen a trend with companies wishing to be 'reshored'," Grant said in an interview. "They are not satisfied with the quality of products being produced abroad, and managing that from afar is a real challenge."

With automation, companies are able to bring manufacturing back to the US, respond to changing market demands quicker, protect Intellectual Property, and have total quality control. "From a financial and a logistical perspective, automated production in the US just makes sense," Grant added.

While consumer expectations for superior goods and services continues to grow, operating closer to the demand allows companies to reduce lead times, and keep up with the market's incessantly changing demands. Automation also offers the opportunity to reposition labor to carry out different tasks.

Grant said the importance of onshoring has been acknowledged by President Obama, with his proposal of tax relief for companies that return jobs to America. Obama also alluded to end the favorable tax treatment for companies who move work overseas, which will encourage the manufacturing pendulum to swing back.

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