Reshoring will greatly benefit Canada’s economy
Offshoring is a widespread business practice that surged in part due to globalization. Many companies recognized that outsourcing could significantly reduce production costs and increase access to new technologies and a skilled workforce without investing and maintaining the talent, wages, and in-house skills.
As industries started to grow, they focused on increasing profit by producing more at a lower cost; thus, manufacturers from countries with low labor costs took advantage of this and became leaders in mass production. China, also known as “the world’s factory,” is an excellent example of this phenomenon. The Chinese have a robust business ecosystem, lack regulatory compliance, and low taxes and duties, making it the prime candidate for western and European businesses.
Nevertheless, outsourcing is not bulletproof. The reality is that most companies who benefited from these practices started to see the gaps in their supply chain and faced adverse consequences during the Covid 19 pandemic. Thousands of products and services were heavily delayed or altogether put to a halt at a global scale. After seeing the adverse effects of offshoring manufacturing and assembly processes overseas, Canadian businesses started making an effort to return manufacturing and production operations to Canada. Former parliamentarians established the Reshoring Canada group to advocate for a more robust and more streamlined supply chain. The organization’s primary goal is to analyze and offer solutions for stakeholders to help support local industries and job demand.
Rainhouse’s mission of keeping talent and manufacturing in Canada helped double revenue in 2020. Local businesses recognize the downsides of offshoring such as restrictions, delays, freight limitations, and overall risks.
Now, as the world adapts to the new normal and businesses readjust. Rainhouse can say by experience that keeping the supply chain and manufacturing processes in Canada will be hugely advantageous.
Reshoring will greatly benefit Canada’s economy and many small companies that had struggled to compete with manufacturers overseas. In the past, we had to redirect our focus from the manufacturing aspect to research and development. Reshoring initiatives will help diversify industries and increase economic gains for Canada, creating jobs and a skilled workforce.
Moreover, reshoring ensures that employees have fair wages, strengthens the economy, and empowers local communities. Companies that choose to re-shore will contribute to a more robust supply chain with streamlined processes, a trained and experienced workforce, and maintain working capital within Canada. Aside from financial and economic advantages, reshoring also provides environmental benefits in the long term. Keeping processes and manufacturing in Canada will help reduce the carbon footprint from shipments and other environmental wastes created from offshoring.
At Rainhouse, we believe in continuing reshoring to permanently change manufacturing. However, we can only achieve this goal through research, investment, and continuous collaboration. Companies need to research new and more efficient ways to accomplish the processes done overseas. They must also invest in equipment and capacity to fulfill demand and have competitive pricing. Lastly, companies need to understand the importance of collaboration. Sharing knowledge from past projects is crucial for building a stronger foundation in Canadian industries. As a company, understanding our abilities helps us partner with others and avoid unproductive investments in the long run. Partnering with companies that have different capabilities will make businesses more efficient and smarter when allocating resources allowing all parties to benefit.
We want to hear your thoughts on reshoring and its benefits for your business and industry in Canada.
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