September 1, 2020
Since the COVID-19 pandemic struck the global economy, many logistics operations reported severe disruptions, especially from their overseas supply chains. As firms consider reshoring their supply chains to America, they will demand more American workers. Therefore, to remain competitive, firms must redouble their efforts to attract and retain employees.
Reshoring and Nearshoring
According to a Thomas survey conducted in May of 2020, 64 percent of American manufacturers “are likely to bring manufacturing production and sourcing back to North America” in response to global supply chain disruption induced by the pandemic. Firms may choose to either reshore, moving operations back to the United States, or nearshore, launching operations in Canada, Mexico, and other nearby nations.
Even before the pandemic, Kearney’s 2019 Reshoring Index was positive for the first time since 2011, largely as a result of the trade war between the United States and China. Looking forward into 2020, Kearney forecasts that “companies will be compelled to go much further in rethinking their sourcing strategies—indeed, their entire supply chains.”
Likewise, experts at MIT’s Sloan School of Business discuss the fact that national security and trade war concerns have already been motivating American firms to reconsider their Chinese supply chains. While most do not expect a total exodus from China, Professor David Simchi-Levi believes that some firms are considering fully reshoring. Others may generally choose to bring their manufacturing closer to end consumers.
In spite of persisting high unemployment in the United States, firms may soon struggle to attract their desired levels of logistics talent due to reshoring.
When companies return to the United States, sector employment unsurprisingly rises in response. According to the Reshoring Initiative’s study on the manufacturing sector, firms’ announcements of reshoring activities since 2010 directly led to a 31 percent increase in manufacturing jobs. In 2018 alone, reshoring efforts contributed to 145,000 new manufacturing jobs.
With current sentiment in mind, this pattern may repeat itself in the supply chain job market.
Harry Moser, president and founder of the Reshoring Initiative, told Qlicket that “west coast distribution centers will shrink, while logistics associated with moving domestic components to domestic assembly plants will increase.”
In fact, reshoring could “increase domestic manufacturing by 40%, enough to balance the goods trade deficit,” causing overall logistics employment to rise substantially. Moser also affirms that the coronavirus pandemic accelerates these trends “by demonstrating the value of short domestic supply chains.”
Meanwhile, logistics employees are eager for greener pastures. The 2020 DSJ Global Job Confidence Index found that many supply chain employees are considering new employers. Forty-one percent of survey respondents say that they are “unlikely to stay with their current employer in the next few months.” Although they hold some reservations due to the current state of the macroeconomy, supply chain employees are still actively searching for opportunities with prospects of faster career advancement.
As global uncertainty prompts a surge in American supply chain hiring, companies will do well to reconsider their employee attraction and retention strategy. Doing so is critical for navigating the new normal.
Through cutting-edge employee engagement solutions geared toward frontline workplaces, Qlicket stands ready to assist firms in this process. Learn more about our solution and how it can provide your firm with insights about engagement, turnover, and morale.