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U.S. Companies Reshoring Operations Back Home

American business executives are reconsidering their overseas operations and realizing that outsourcing may not be the best option.

Dana Olson, President and CEO, Ecodev (2011 Directory)

If you think the key to profitability is to outsource or locate operations overseas, think again. While many growing U.S. companies have sought greener pastures outside the nation's borders over the past couple of decades, the tide is turning. An increasing number of businesses are now looking to bring jobs back to the United States.

Several factors are driving this sea change, from rising shipping and transportation costs to quality control issues to a desire among U.S. companies with overseas operations to do their part in rebuilding the hurting economy at home.

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Seesmart LED CEO Ken Ames discusses why he decided to move his company's operations from China back to the United States. Click to enlarge.

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When given the choice, most U.S.-based companies that outsource overseas would choose to move operations back home if it made financial sense to do so. Once business leaders learn that there are U.S. locations with qualified and affordable labor, low taxes, and attractive economic incentives, they are often eager to explore their options to relocate back to the United States.

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At Ecodev, we are seeing a number of small- to mid-sized manufacturers rethinking their overseas operations and questioning the financial incentives that lured them there in the first place. One Minnesota manufacturer that produces its products in China recently decided to move a production facility back to the United States. It expects an approximately 25 percent savings on the overall cost of each item due to cost savings of shipping and transportation. And California-based Seesmart LED, which makes light-emitting-diode (LED) light bulbs in China, is scouting U.S. production locations. Its executives say that when they consider all costs, the difference to produce its product in the United States is insignificant, and they would prefer to create jobs here.

For small- to mid-sized businesses with overseas operations, the time is right to examine overall operating expenses and determine if these facilities are financially viable, or if a return to the United States better suits long-term growth.

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About the Author

Dana Olson, President and CEO, Ecodev
Dana Olson founded Ecodev LLC in 2002. He specializes in site selection and economic development consulting, particularly in the manufacturing, biotechnology, medical technology, and alternative energies sectors. Before founding Ecodev, Olson was the COO of ACI Telecentrics, which provides customer service, marketing, and back office support to Fortune 500 companies in the insurance, financial, and telecom industries. Olson is a member of the Industrial Asset Management Council.

More articles by Dana Olson

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Are large manufacturers also moving operations back to the United States? Why or why not?

At the time, it doesn't seem there is any particular push for larger manufacturers to come back. More
- Dana Olson, President and CEO, Ecodev

How important are consumer perception and the "Made in the U.S.A." distinction for companies considering reshoring?

With the small to midsized companies Ecodev works with, the "Made in America" brand is very important. More
- Dana Olson, President and CEO, Ecodev

Are reshoring businesses moving their operations from a few countries in particular (Mexico and China, for instance) or from a diverse group of countries?

Yes, we are seeing the most movement with manufacturing facilities relocating from China and Mexico. More
- Dana Olson, President and CEO, Ecodev

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