Re-Shoring OEMs Challenged by U.S. Expectations
For the past few decades, OEMs based in the U.S. have had many good reasons to ship the bulk of their manufacturing and supply chain jobs to other countries in the APAC region. The most compelling reason was that it dramatically reduced costs. Other benefits included less stringent regulations and greater convenience.
The massive supply chain network they have built around the world, especially in APAC, is, in the opinion of many, a triumph of globalization.That’s all changing. The trend began its reversal about three years ago when U.S. President Barack Obama proposed tax incentives meant to encourage companies to return to the U.S. the jobs that had moved overseas. Furthermore, Obama proposed ending or severely reducing tax breaks for businesses that continue to move jobs from the U.S. to other countries. Other factors contributing to the moving of jobs from Asia to the U.S. was the increase in labor costs in some parts of that region and the more consistent pricing of raw materials, which used to be considerably more affordable in Asian countries.