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July 2022 O'Neal Steel Market Informer displayed on iPad

Survey: 70% of Companies Planning Reshoring or Nearshoring Projects 

Seven out of ten U.S. based manufacturing companies are planning to invest in new production capacity closer to their home bases as a result of the global upheavals of recent years, a new survey has found. The robotics and automation arm of global conglomerate ABB recently polled 1,610 executives in the U.S. and Europe about their capital spending plans in the wake of the COVID-19 pandemic’s arrival, the resulting supply chain chaos and Russia’s invasion of Ukraine. Of the respondents, 37% said they plan to return production to U.S. shores while a third said they will look to nearshore new operations.

Those new facilities will include more investments in automation than in the past, ABB’s survey shows. More than 40% of business leaders said they will use automation and robotics to make their supply chain more resilient. That will add to an upswing that grew the U.S.’ robot density–defined by the International Federation of Robotics as the number of industrial robots per 10,000 employees—from 176 units in 2015 to 255 in 2020.

“Business leaders are responding to unprecedented supply chain disruptions by putting into place measures to make operations more resilient and adaptable,” Sami Atiya, president of ABB’s Robotics & Discrete Automation Business, said in a statement. “While investment in automation plays a key role in flexibility in operations, equally important is investment in education, vocational training and apprenticeship programs.”

The ABB survey adds some details to the scope of a reshoring trend that Ingersoll Rand Chairman, President and CEO Vicente Reynal last month said has gathered speed since COVID and the resulting supply chain shocks. Speaking at a Wolfe Research conference, Reynal said a lot of Ingersoll Rand’s customers–as well as the maker of pumps and compressors itself—are shortening their supply chains and building new plants in or near the U.S.

Data from the Federal Reserve System and elsewhere also look to be reflecting that push: After returning to pre-pandemic levels in the third quarter of last year, total capital expenditures by nonfinancial businesses have surged since then. Annualized, spending during the fourth and first quarters was nearly 23% greater than in 2019. The Reshoring Initiative, meanwhile, recently reported that last year saw 261,000 reshoring and foreign direct investment announcements, up 46% from 2020.

Source: IndustryWeek, 06.28.2022

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