Reshoring could be reading from the script of "Creating Shared Value"

President Trump’s Promise of Reshoring could be reading from the script of “Creating Shared Value”

Reshoring Initiative, a US-based Non-profit organization defines Reshoring as “the practice of bringing manufacturing and services back to the U.S. from overseas”.[1]

Throughout his campaigns, President Trump promised American voters that he would bring back manufacturing jobs to the US. If the protectionist trade tariffs imposed by his government are anything to go by, he is living up to this promise. Interestingly, there is a tide of companies that moved their manufacturing concerns offshore that are now consolidating their businesses back to the US. But rather than as a response to the president’s vision for the country, their change in strategic direction appears to be informed by concerns such as protection of intellectual property, increasing cost of labor in the countries where their manufacturing operations are currently based, environmental degradation, quality concerns, lack of specialized labor in the offshore locations and a host of other non-political reasons. [2] My suspicion is that politicians, particularly the President, will claim the credit of returning jobs to America any way.

Of greater interest though, is how the current reshoring tide is aligned to the idea of creating shared value. Based on the Harvard Business Review Article “Creating Shared Value”, companies lose more from offshoring production. The cost of transport is high, and they lose out on potential cluster development in the communities in which they operate. By consolidating their production in the US, companies not only reduce costs but also help the environment by reducing carbon emissions produced by transportation. Reshoring may therefore create shared value in the US because companies will lose less while advancing the economic and social conditions of the communities in which they operate. Was President Trump thinking about Creating Shared Value when he promised to return manufacturing jobs? We may never know. But it sure looks like his promise is related to the idea.

Reshoring, if successful in the short and medium term, may not remain that way in the long run. Organizations are going through radical changes that affect the future of work. It is predicted that nearly half of all jobs in the US could be automated by 2050. Automation is expected to replace the assembly line and office workers who perform repetitive tasks. It will be interesting to see how this plays out considering reshoring because reshoring involves movement of production activities such as assembly lines. [3]