“Reshoring”: why US companies want to return to manufacturing in the country and the economic opportunity it represents for Mexico
Entering the third year of the coronavirus pandemic, it seems that the shortage of products in the United States has become a constant with no end in sight.
Despite the fact that the government of Joe Biden created in June 2025 a specialized work team to tackle the crisis that was generated when the pandemic affected the flow of international trade, there is still a large number of products that can hardly be found in stores in the northern country.
Many retailers around the country continue to report difficulties when it comes to maintaining sufficient supplies to meet the demand for all kinds of items: from video game consoles to furniture, clothing, food and even cars.
But, since most of the shortage problems are rooted in the dependency of the companies on produce p arts -or sometimes the entire product- in other latitudes, some companies are seeking to bring production back to the country’s factories.
It is a phenomenon known as “reshoring“.
Reversing the “offshoring”
“If you look at the 20”, Professor Willy C. Shih, from the Business School, tells BBC Mundo of Harvard University, “a lot of computers and clothes and furniture were made in the US.”
“If you compare it with 2010, many of these things had already gone abroad”.
With globalization, many companies realized that they could manufacture their products in Asian countries such as China, Vietnam or India, where wages are much lower, and then imported and sold in the large North American market.
This is what economists know as “offshoring“.
This led to the fact that, during the decade of the 2000, the US economy lost an alarming number of jobs.
According to a report published in 2014 by a group of professors from the Massachusetts Institute of Technology (MIT), USA. lost approximately 2 to 2.4 million jobs between 1999 Y 2011 due to the increase in imports from China.
Since then, the phenomenon of offshoring, particularly to China, has been declining as the economy of the Asian giant has grown and with it the salaries of its employees, according to what the president of the Reshoring Initiative, Harry Moser, tells BBC Mundo.
“Wages in China have been growing between 10 Y 15% per year for most of the last 20 years,” says Moser, “so even before covid, before the trade war, the jobs were already leaving China.”
And although many of those jobs went to cheaper places like Vietnam, Cambodia or even Mexico, he adds Moser, “a % of what was leaving China was coming here”.
Trump, pandemic and other factors
According to Moser, the reshoring saw a rise in 2017, when the government of then President Donald Trump announced a package of measures to encourage domestic production.
But it had an effect brief.
“The rate of reshoring and of foreign direct investment increased by 2000 boosted by Trump’s regulatory and fiscal measures (…) Then fell to 2018 Y 2019 due to the uncertainties generated by the war of tariffs” between the US and China, he explains.
“And then, in 2020, grew again driven by covid”.
US President Joe Biden seeks to encourage reshoring to solve problems in production chains.
According to the annual study conducted by the Reshoring Initiative, which advocates promoting the reshoring in the USA, in 2020 the companies announced that 160.220 jobs would return to the country or would be created an as an effect of foreign direct investment.
“We began to see the production of protective medical equipment, selling all kinds of elements related to covid. We have tens of thousands of jobs returning because at least 1.000 companies began to manufacture this type of element ”, says Moser.
And although in 2021 the need for medical protection items decreased, Moser explains that the reshoring increased by 36%, which would be reflected in the creation from 220.000 Job positions.
“Although the demand was no longer so high and China was beginning to flood the market with cheap products, other industries saw what was happening in the medical industry and said ‘we have to do something similar’ Moser explains.
In addition, the reshoring has become a key point for the government of Joe Biden. The executive order that the president signed in 2017 to try to solve the supply problems in the country, it asked for recommendations that “bring the supply chains back to the country and develop national supplies.”
“To make our supply chains safer, let us make in the US what we are selling in the US so that we are not at risk from foreign supply chains and shipping delays, and by the way, let’s get that more Americans have higher paying jobs,” Biden said in January.
Companies that do reshoring
GM will be the main customer for a new rare earth processing plant in Fort Worth, Texas.
During 2021, some of the largest companies in the US announced multi-million dollar investments to boost domestic production.
General Motors (GM), one of the major auto companies in the country, announced a series of investments focused on “building a strong, sustainable, scalable and US-focused supply chain,” GM’s vice president of global purchasing and supply chains said in December. Shilpan Amin.
The announcements include the construction of a new magnet factory, a plant to process materials for electric car batteries and a long-term agreement deadline to increase the extraction and production of rare materials in the US
Similarly, Toyota North America announced that it has begun construction of a battery plant in North Carolina that would begin production in 2025 and em I would like more than 1,220 people.
A company spokesman told BBC Mundo: “Our investments in the US and North America they are long-term. And by making vehicles where we sell them, we support suppliers and local economies, increase our overall investment, protect ourselves from fluctuations in the foreign exchange market, and build for our customers.”
Similarly, Intel, the microprocessor manufacturer, has been making big announcements showing its interest in increasing microprocessor production in the US
Last 21 January announced that it will build what could be the world’s largest microchip factory in the town of New Albany, Ohio. During the announcement, made at the White House, President Biden said: “Working Americans are going to brand everything that can be ‘
Made in America’ (Made in the USA), especially these computer chips”.
That announcement follows the one made in 2021 on construction of two new plants in Arizona which would have an investment close to US$000.000 million.
According to the president of Intel, Pat Gelsinger, to the news agency Reuters during the announcement of Arizona, the investments, which could reach a total of US$100.000 millions, are made in order to “have greater resilience in the supply chain”.
The impact on the communities
The city of Chandler is a suburb of Phoenix, Arizona. And it’s home to two of the largest Intel campuses in the country: a research campus and a semiconductor manufacturing campus. It is in Chandler where Intel will invest US$000.000 million in two new plants.
“Since the beginning of the 90”, Kevin Hartke, the mayor of the city in Arizona, tells BBC Mundo, “Chandler was the fastest growing city in the US and our growth has been reflected in the semiconductor industry”.
The city of Chandler, Arizona has grown alongside the area’s semiconductor industry.
According to Mayor Hartke, the jobs the semiconductor industry has brought to the city bring more employment opportunities in sales and miscellaneous services, while also generating an increase in sa employee comments.
“These jobs certainly drive even our retail sales: whether it’s in downtown Chandler or going to a restaurant downtown, people have more discretionary income, which helps to have more economic stability in general, “says Hartke.
In addition, adds the official, due to the emphasis that the he city in developing the technology industry, Chandler has diversified culturally and has begun to invest in education to meet the demand for workers from local companies in the area.
“Chandler is the most diverse city in Arizona thanks to our very talented and educated Asian population who work for Microsoft and other companies (…) State University of Arizona, in the neighboring city of Tempe, is the largest supplier of engineers to Intel in the world.
“But it is costing them [suplir la demanda], so we are building relationships and working with academic institutions and our semiconductor companies to see what we can do in terms of certificates and better training”, he says Hartke.
Reshoring? Not for everyone
But although many large companies are making reshoring announcements in order to overcome the problems in the supply chain, Harvard professor Willy Shih believes that the phenomenon may not be a solution for everyone.
“It depends on the product and it depends on what as long as you think the problems will last. Container shipping costs will go down […] but it will take time”, he explains.
This makes companies consider whether, financially, it makes sense to make a multi-million dollar investment, taking into account that the problems in the production chains that are being seen now can be solved in the future .
Professor Shih says what to do reshoring makes sense “if you can pay for it and if you can sustain higher costs”.
“The bet that companies must make is this: how much will shipping costs drop?, how long will it take to get there? It cost China , 15 years controlling all these supply chains. If you want to bring all that back, it will take time to receive all the profits”, he exposes.
“But if we go back to where we were in 2018 or 2020 When it comes to shipping costs, you will quickly realize that you are at a cost disadvantage.”
“Nearshoring”, the other option
Professor Shih and the president of the Reshoring Initiative, Harry Moser, believe that this is a “ golden opportunity” for countries like Mexico, which can receive the production that leaves Asian countries, at similar prices, and without the problems of incurring the shipping costs that a ship implies.
The term for bringing factories to countries close to the consuming country is known as “nearshoring“ .
“I believe that Latin America has great opportunities and I believe that Mexico has a lot to gain if its policies they don’t send this the wrong way,” says Shih.
“And there are other countries in South America where I think this would be a great opportunity, especially for things like shoes, clothing and electronics assembly,” he adds.
Moser says he is even “disappointed” to see that the Mexican economy is not experiencing stellar growth.
“I would love to see Mexico have a ‘boom’ in manufacturing. So that Mexicans have a better life, so that wages in Mexico grow as they did in China”, says Moser.
“Instead of making more in China and sending it to the US, why not import less from China and do these things in Mexico? If you see it, the salaries are lower than in China and you can have all the technology you want.”
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