Featured Image

Supply Chain Forecast for 2023

Supply chain experts share their outlook as North American companies accelerate reshoring and foreign direct investment while abnormally low interest rates are being raised to control inflation.
Mar 08, 2023

The U.S. economy and manufacturing are in flux. We are transitioning from decades of increasing offshoring to accelerating reshoring and foreign direct investment (FDI). At the same time, abnormally low interest rates are being raised to control inflation. Following is a summary of our observations from our recent video discussion of 2022 and best insights for 2023. The video of our discussion is here[MCN1] .

2022: A very good year for manufacturing technology. A great year for reshoring.

Manufacturing technology orders started the year strong and softened at year end. At 6% below 2021, 2022 was the 3rd best year ever. Appliances and HVAC were strong. Construction softened.

Association for Advancing Automation’s (A3) latest quarterly stats show 35,804 robots ordered between January and September, up over 20% from record 2021 levels.

Advancements in automation technology, along with labor shortages in manufacturing and robotics, are among the factors driving expanded use of robots. Also, the need to reduce the impact of higher U.S. labor costs relative to China and other offshore alternative sources.

Reshoring, plus foreign direct investment, totaled announcements of a record 350,000+ jobs, up from 6,000 in 2010 and from a record 260,000 in 2021. Driven by government funding of EV batteries, chips, solar, and more, as well as by fear of supply chain disruptions.

The reshoring trend has been strong since 2010 in the South, from the Carolinas to Texas. With the surge in batteries and chips, the trend has extended to Arizona and to the Midwest, especially Michigan and Ohio, and added a large chip foundry in New York State.

Repeated surveys show a strong sourcing swing from global to domestic and nearshoring.

In addition to the ongoing costs, e.g. freight, duty and inventory, companies have seen increasingly frequent major disruptions such as COVID, Thai floods, ocean freight delays, Suez Canal blockage, and Russia/Ukraine.

2023: About flat

We anticipate: Real GDP about flat for the year; goods trade deficit down, driven by lower consumer demand and more reshoring.

China: Reopening to COVID will improve deliveries. Population decline started in 2022, down almost 1M. Concern that China will get old before it gets rich and lose momentum. FDI would decrease. Growth would slow. FDI would decrease more. Companies will see China less as the world’s best market and more as one of its riskiest.

2022’s disruptions caused delivery delays of a month or two. Companies are increasingly concerned over geo-political events, e.g. Taiwan, that could permanently end shipments. Reshoring and nearshoring are now seen as insurance against such risks.

Companies are shifting their focus from worrying about saving pennies on components to assuring they get the components so they can ship their product and make profits.

Reshoring: Flat at close to record levels. Reasons: Government incentives will be lower than the $100 billions announced in 2022, especially given the shift in control of the House. Shortages of workforce for construction and factory staffing will discourage or delay some projects.

The year 2023 will be a good year, but may not a record year for our industry. You could help make it a record year for your company. Use the Reshoring Initiative’s tools to identify reshoring opportunities. Use the total cost of ownership (TCO) Estimator to convince customers to reshore and buy from you.

For more information to shift OEM executives’ decisions toward onshoring for the sounder and more financially beneficial strategy of using lean-performing North American suppliers, visit The Onshoring Project. Its founding partners include AMT, Gardner Business Media, The Reshoring Initiative, Aerospace & Specialty Metals Group (ASMG), and Industry Week.

Ryan Kelly
General Manager, San Francisco Tech Lab
Recent advocacy News
Is it a good time to make things in the USA? Gather insights on semiconductor manufacturing, reshoring, and tech advancements, uncovering essential strategies for growth and opportunity.
The concept of sustainable manufacturing is rooted in the production of manufactured products through economically-sound processes that minimize waste, with consideration of the three ESG pillars: environment, social and governance.
Manufacturers face a shortage of 3.8 million workers by 2033, costing $1 trillion in 2030. This skills crisis necessitates rethinking education and workforce alignment and shifting toward skills-based hiring and diverse talent pools for future success.
U.S. reshoring flourishes amidst China's economic downturn and decreasing exports, driving a geopolitical trade shift. Insights reveal economic trends, industrial policy, and future projections.
As global dynamics evolve, a transition to productivism prioritizes local investment. U.S. defense strategy and strategic policy development foster resilient supply chains as reshoring trends see economic benefits. Learn how this affects your business.
Similar News
By Fred Qian | Jul 24, 2024

Chinese manufacturing continues to yield positive results, showing particular resilience in the EV and shipbuilding sectors. Will more stimulus be needed to achieve growth targets? For more industry intel and other tidbits, read on.

4 min
By AMT | Jul 22, 2024

Effective email marketing balances text and visuals to engage without triggering spam filters. Learn strategies for integrating compelling imagery with substantive content, emphasizing search-friendly text and authentic visuals to drive recipient interest.

5 min
By Stephen LaMarca | Jul 19, 2024

Supply chain orchestration. Aussie brick-laying robot truck. Physical AI sensors. Royalberry PI. 3D printing with resin stinks.

7 min