The repatriation of North American manufacturing

· 3AG blog

For the better part of 2020, or what now seems like an eternity, we have been in the midst of an unprecedented economic transformation. Office workers have been sent home, restaurants and retailers that depend on foot traffic have been crippled, and supply chain gaps have been painfully uncovered. Despite this shock, we have also seen incredible resilience from governments, companies and individuals. Echoing the WWII war production efforts, the speed with which manufacturers have responded to healthcare equipment shortages is nothing short of heroic.

After the crisis has passed, the question for everyone will of course be, “what next?” Clearly, the world has changed in the most dramatic fashion. Leaders at every level are now questioning a generation's worth of conventional wisdom. Rapid responses to gaps in our healthcare systems and supply chains will eventually give way to careful reflection focused on the inherent fragility of these systems, with a eye towards strengthening their ability to withstand even bigger shocks. Mindless pursuit of the cheapest option at the expense of systemic health will be much less palatable. Looking more carefully at their communities, people will start to ask whether they need to further than just paying a little extra to support local producers.

In this environment, the question of security will naturally lead to the question of whether we will see a repatriation of manufacturing capability. At 3AG we firmly believe not only that overseas manufacturing capability will return to North America, but that this reshoring will occur faster and more extensively than anyone expects. Not only will we see companies move overseas production capacity back to Canada and the United States, but we will see already-established local manufacturers dramatically retooling and scaling production across the continent.

But why should this be the case? After all, this crisis may be foreshadowing complete economic disaster. Companies will double-down on cost saving initiatives as consumer demand collapses, right?

Even in a world of significant economic pullback (which for the record we don’t subscribe to) there are many compelling reasons to bet on a coming local man