The manufacturing industry is currently facing significant challenges due to tariffs, trade conflicts, market volatility and geopolitical uncertainty. These factors have complicated strategic decision-making, particularly regarding offshoring and nearshoring. As a result, reshoring has become essential for business continuity and stability, with a 15% increase in CEOs planning to reshore operations within the next three years. However, organizations should carefully evaluate both the benefits and risks of reshoring to ensure informed and effective decisions.

Why reshore: Choosing sustainable growth over mere cost-cutting

Macroeconomic and enterprise benefits of reshoring

Strengthening the national economy and industrial base

Reshoring manufacturing operations presents substantial macroeconomic advantages. Returning production to domestic facilities enables the nation to restore its manufacturing base and safeguard local interests. This approach increases industrial capacity, lessens reliance on international suppliers and improves economic resilience.

Supply chain reliability and economic security

According to the 2025 Reshoring Survey Report, half of contract manufacturers note that original equipment manufacturers (OEMs) favor sourcing from reshored partners to reduce supply chain disruptions. Localized and shorter supply chains diminish risks associated with complex global networks. Consequently, critical goods—including electronics and medical supplies—can be produced domestically, reinforcing both economic resilience and national security.

Quality, delivery and operational advantages

Reshoring addresses not only supply disruptions but also key operational objectives. Survey results indicate that 61% of manufacturers recognize improved quality, reduced rework and warranty benefits as primary reshoring incentives, while 54% report faster delivery times as a significant advantage.

Improved trade balance and fiscal health

At the broader economic level, reshoring contributes to a more favorable trade balance and assists in reducing budget deficits. By lowering import volumes and increasing exports, the nation minimizes dependence on foreign borrowing, thereby supporting fiscal stability.

Fostering innovation, competitiveness and sustainability

In addition to immediate economic benefits, reshoring stimulates innovation and competitiveness, fostering continuous improvement and adaptation to advanced technologies and automation. This ensures enterprises and the workforce remain leaders in high-quality, scalable production. Moreover, investment in domestic manufacturing supports environmentally responsible practices; reduced transportation distances decrease emissions and resource waste, making reshoring a catalyst for sustainable growth and climate action.

Enterprise-level cost reduction and revenue growth

From an enterprise perspective, reshoring reduces production costs by eliminating expenses tied to offshoring, such as transportation, inventory management, supply chain risk and quality assurance. Under favorable national regulations, reshoring may increase revenue by up to 24%. The MEP National Network study reports that 59% of CEOs cite improved total landed cost as the main driver behind their reshoring decisions.

Confronting the reality: Key considerations and best practices for reshoring

While reshoring offers undeniable economic and strategic benefits, bringing production back onshore entails a range of complex challenges. The need to plan carefully, invest strategically and adopt advanced technologies make reshoring as much an operational transformation as production relocation. To reshore successfully, enterprises must:

• Modernize infrastructure

  Many factories use outdated equipment not suited for today's production needs; in the US alone, $2.65 trillion of legacy OT remains in use. Reshoring requires upgrades to both operational and information technology, which can be costly for companies facing supply chain or financial challenges. Companies need strategic plans with thorough cost-benefit analyses to gauge returns. Automation and AI can help reduce labor costs and increase efficiency.

• Reengineer products

  Products designed for overseas manufacturing typically depend on extensive manual labor to reduce costs. Bringing production onshore, where labor is more expensive, makes automation vital as it can potentially reduce labor costs by 40%.

  Integrating robotics and AI into production lines is crucial for boosting efficiency and reducing costs. So, manufacturers must redesign products with automation-friendly features. This necessitates a rethinking of both product design and manufacturing methods.

• Overhaul supply chains

  Reshoring often requires rebuilding supply chains from the ground up. Aligning assembly processes with domestically sourced components may introduce compatibility challenges, necessitating additional testing and recalibration that can add both time and cost. Organizations must re-evaluate partnerships with overseas suppliers of essential components, establish robust collaborations with domestic suppliers and set clear metrics for local sourcing to mitigate reliance on vulnerable global supply chains. Effective inventory optimization is critical in supply chain transformation. Maintaining real-time visibility across inventories within the corporate ecosystem supports optimal stock levels. The implementation of digital twins can provide a significant advantage by simulating and refining new supply chain models; notably, employing a digital twin to forecast weekly days-of-supply policies has been shown to enhance regional distribution center utilization by 10%.

• Categorize raw materials

  Many specialized materials – such as rare earth elements and those used in magnetics – and their suppliers may not be readily available domestically. For instance, the US currently imports 10,000 tons of rare earth magnets annually. Besides, onshore regulatory requirements for certain materials may not be feasible compared to the regulations of the source country. So, it is crucial to recognize that reshoring may not be the right option for every product line. Therefore, enterprises must identify and prioritize the product categories that would benefit the most from reshoring, in terms of material type and availability and the regulatory complexity pertaining to it. This will expedite ROI while keeping the TCO in check, allowing manufacturers to scale gradually. For enterprises that must rely on such specialized materials, the imperative is to explore alliances with resource-rich countries and invest in recycling programs to mitigate raw material shortages. Here, early planning is critical to avoid bottlenecks.

Though overwhelming, these challenges are not insurmountable. Understanding the obstacles is the first step toward effective solutions, paving the way to forging alliances with those who can facilitate efficient, cost-effective and sustainable reshoring.

The way forward: Synergizing with specialists

Companies aiming to take on the considerable task of reshoring should not attempt it in isolation. Successful and timely reshoring depends on collaboration across the entire ecosystem, from local suppliers to digital transformation partners. Because these efforts align with broad organizational change, working with an experienced transformation partner can greatly ease the reshoring process.

With four decades of practical expertise guiding transformative initiatives through shifting business landscapes, HCLTech is a trusted partner for leaders in the manufacturing industry. We provide end-to-end services—including consulting, strategic planning and technology implementation—to support the reshoring and localization of manufacturing operations. By emphasizing intelligent automation, reducing complexity, standardizing processes, forecasting demand, managing inventory and performing real-time safety stock analysis, we help make reshoring more efficient. Our approach fosters hyperconnected manufacturing operations that are both sustainable and profitable, equipping enterprises to tackle present and future challenges.

Click here to find out how we can simplify and expedite your reshoring journey.