The global footprint of manufacturing is changing, and the old thinking around chasing low-cost labor around the world is just that—old! It has been challenged by one disruption after another, starting with the U.S./China trade war and shaken further by the pandemic and the associated supply chain issues that followed. The current thinking is that products could, and should, be produced in the region they are consumed, or at least as close as is practical: reshoring where practical, nearshoring, or friendshoring when something else dictates manufacturing location—such as price, capability, a supply chain issue, or perhaps even a tariff issue. This trend has the potential to deliver shorter, more sustainable supply chains, while mitigating risk and reducing dependency on specific geographies that may be subject to geopolitical disruptions. We’re seeing the trend for regionalization accelerate. This means more manufacturing coming back to the Americas, and perhaps equally significantly, less leaving as volumes rise. Initially, this is great news for manufacturers in North America, especially those with a strong footprint in the U.S., Canada, and Mexico. Mexico is doing particularly well—partially because of globally competitive labor rates, but also because it has an exceptional manufacturing ecosystem supported by a large talent pool and is the number one exporter to the U.S. But it’s not all good news, or at least it won’t be if those manufacturers cannot compete economically and scale to meet growing demand. The barriers to their success are clearly twofold—labor shortages and operational efficiency. Many EMS companies in North America are, or will soon be, running at close to capacity, and most are struggling to grow their headcount. The thought that the manufacturing renaissance in North America could stall because of simple labor shortages isn’t very palatable. Governments and companies have invested in a future with more localized supply chains. We don’t want to see that fail because we cannot recruit and retain the right people.

Full report : North America’s manufacturing renaissance needs automation.