Challenges of Moving Manufacturing Out of China
February 23, 2021
There is plenty of manufacturing capability around the world for consumer goods, PPE, testing equipment, medical devices, consumer goods, and other industrial products. So why are companies reshoring their manufacturing operations now?
The Tax Reform Act of 2017 helped. The 301 China penalty tariffs gave a little push. But the global pandemic made executives acutely aware of their global supply chain risks and vulnerabilities and provided an opportunity to rethink their global manufacturing strategy. New strategies typically include at least some capacity for manufacturing and sourcing critical goods in America.
Pharmaceutical manufacturers were among the first to consider reshoring in an attempt to reduce America’s dependence on basic ingredients coming from China and India. Other industries are now actively following, including automotive, plastics, and machinery. But how easy is it to extract your manufacturing from China or end your relationships with suppliers and contract manufacturers?
It’s not so easy.