Reshoring vs. Nearshoring Explained: Examining Key Manufacturing Strategies

The last several years have brought many changes to the manufacturing and industrial sectors, with COVID-19 requirements, supply chain disruptions, and now trade disagreements upending established practices.

While offshoring efforts have been ongoing for some time, other approaches have come to the forefront in recent years, namely nearshoring, friendshoring, and, most promisingly, reshoring. In our post, we examine all of these approaches and how the global supply chain is being affected.

Defining Global Supply Chain Approaches

Companies are always looking to reduce costs while maintaining quality and retaining clients. For decades now, one popular way to go about this was through offshoring, but complicated reasons have led to other approaches being often more desirable.

Offshoring

Offshoring involves hiring an organization to complete work outside of the home country of the primary business. Though lower production costs and differing labor laws can make this an attractive option in some cases, time zone differences, language and cultural barriers, logistics and security issues, shipping times, and more can lead to significant problems.

Nearshoring

Nearshoring can be considered a subset of offshoring. It involves hiring an outside organization in another country, the same as offshoring, with the only difference being that the foreign country is “close” to the primary business’s home country.

This can help streamline some efforts, remove time zone issues, speed up shipping times, and facilitate other benefits, but various other problems associated with offshoring remain.

Friendshoring

Under a friendshoring approach, companies will still offshore their production to an organization in another country, but they will only do so in countries that are considered political and economic allies and which are believed to be stable and low risk.

Depending on current political and economic outlooks, countries under consideration for friendshoring could be near or far away from the primary business’s home country. It all depends on diverse geopolitical factors.

Reshoring

Reshoring, or onshoring, involves bringing manufacturing and other work back to the company’s home country. This approach removes many of the problems associated with offshoring, nearshoring, and friendshoring, as many logistics associated with time zones, shipping, geopolitical status, distance, and other concerns become relatively moot.

The reshoring approach can also greatly aid the home country as it boosts the economy and creates jobs for local workers. In light of the shifting needs of organizations and complexities in the supply chain, many businesses are turning to reshoring for their manufacturing.

Why Are Companies Pursuing Alternatives to Offshoring?

There are a range of reasons offshoring has lost some of its appeal in recent years, and in fact, in early 2024, 92% of U.S. manufacturing executives had considered either nearshoring or reshoring. Reasons for consideration can be due to:

• The complications caused by COVID-19 and their ensuing impact on global supply chains
• The desire to mitigate risks of disruption from natural disasters and global conflicts
• The desire to increase supply chain resilience and security
• Greater control being sought over operations, quality, and intellectual property
• Policy incentives like those in the Inflation Reduction Act, and uncertain trade policies and tariffs being enacted

Considerations for Nearshoring, Friendshoring, and Reshoring

Nearshoring

• Can provide reduced shipping costs and times compared to offshoring
• Improved communication and easier collaboration is possible due to proximity and potential time zone alignment
• Lower compliance risks than offshoring are often possible due to similar standards and trade agreements
• However, political instability and tariff and trade issues can still easily arise
• Economic risks can carry over from offshoring
• Some nearby countries have weak infrastructures, limited scale capacities, or skill shortages
• Language and cultural barriers can remain from offshoring

Friendshoring

• Working with companies in trusted countries can help avoid geopolitical tensions and disruptions and enhance supply chain resilience
• Compliance and safety standards can be improved when working with countries that use similar regulations
• Higher costs can often be accrued compared to offshoring
• Finding workable countries within the pool of limited options can be challenging
• Some areas may lack specialized skills, and cultural differences can still create issues
• Trade tensions can arise with non-aligned nations

Reshoring

• Reduced lead times are likely, with faster product-to-market timelines
• Quality control is improved due to proximity and ease of inspection
• Regulatory compliance with domestic laws is simplified
• Lower logistics and transportation costs are achievable
• Companies can gain access to highly skilled American workforces and also promote their products as being “made in the USA”
• Local tax incentives are available in some areas for companies that reshore their production
• Manufacturing is more flexible and able to incorporate changes more easily
• Operational costs can be higher than offshoring, but the many tradeoff benefits can be well worth it
• Transitioning can be complicated, but this can be mitigated by working with an established and trusted reshoring partner

Improve Your Operations Through Reshoring

Reshoring gained prominence during the COVID-19 pandemic, but it shows no signs of slowing down. In January of 2023, it was reported that 1.6 million jobs returned to the United States that were previously being offshored. Then, in January of 2024, Forbes relayed that 69% of U.S. manufacturers had begun reshoring in their operations, with 94% of them reporting success with their initiatives. For additional insights and up-to-date statistics, see our 2025 reshoring overview.

Whether the strategy is full reshoring or nearshoring, re-sourcing metal stampings to a North American supplier reduces lead times, simplifies QA, and protects supply chains from overseas disruption.

Truly, many major companies and organizations are seeing the light on reshoring, including such significant manufacturing players as:

Choose Valco for Metal Stamping Reshoring

Valco has been a proud American manufacturing company for nearly 60 years, and we’ve worked with businesses both big and small in that time, providing them with quality metal stamping and associated services.

We’re currently working with varied companies and spearheading their reshoring initiatives, and we’re glad we get the chance to illustrate that American manufacturing is second to none.

Companies choose us because we:

• Provide unmatched quality in our components, with each going through full R&D testing and quality control checks
• Are versatile and flexible, being able to provide plenty of ready-made components but also craft prototypes for completely new designs
• Supply our products to businesses throughout America and around the world and facilitate quick shipping times
• Are ISO 9001:2015 certified with design to ensure that we deliver only the best to our customers

Contact Us Today

It’s time to bring your manufacturing home and start reaping the rewards. Valco is standing by to be your reshoring partner and give your business the care and dedication it deserves.

Reach out to our team today to get started.