Could Nearshoring be the Solution to the Supply Chain Crisis?

Made in USA stamp

Companies are looking for solutions as the China-US trade wars deepen and further increase supply chain and manufacturing tension. Nearshoring may be one of these solutions.

Nearshoring is shifting manufacturing operations to a country geographically close to the company’s home market. It can reduce labor costs, as living costs are sometimes lower in nearshore countries than in developed countries.

In the electronics industry, nearshoring is becoming increasingly popular. This is because it’s a highly competitive industry that demands high quality and quick time to market (TTM), and nearshoring can help manufacturers achieve these goals.

This article will look at other benefits and give examples to companies that are nearshoring at present or plan to do so in the future.

Nearshoring drives innovation and benefit businesses

Nearshoring has more than a few benefits and can drive innovation. Companies with closer relationships with their suppliers can better communicate and collaborate on new product development while closely monitoring the process and standards.

Agile development: Nearshoring can help companies to adopt innovative development methodologies. By nearshoring their manufacturing, companies can improve their agility by reducing communication delays and tightening the feedback loop from their suppliers and vice versa.

Resilience: Companies reduce logistics risk, as shipping the product from the supplier becomes much less challenging.

Observation and Quality: Nearshoring can help companies gain better visibility into their production processes. This can help them to identify and address problems more quickly, increase quality, and improve their on-time delivery.

Financial incentives: Nearshore countries like Mexico, Canada, and Central America offer competitive labor costs and fast delivery, making them excellent options for supply chain optimization and improved profits. The United States released the CHIPS Act in 2022, which incentivizes companies to build manufacturing factories in the US.

Companies are shifting to nearshoring faster than expected

According to new research from Capterra, a Gartner company, the shift toward nearshoring manufacturing is accelerating faster than anticipated. The study found that many major US companies have rapidly relocated suppliers closer to home and made significant investments in domestic production.

For instance, Apple nearly doubled its number of US-based suppliers in 2022. General Motors, Boeing, and Tesla also spend capital on new plants in the US and Mexico. The study notes, “Most industry professionals predicted this change would happen very slowly, over five or more years… But even the 2022 numbers we see in the data were stronger than those predictions, and 2023 will continue to see a rapid shift to nearby suppliers.”

Capterra mentions that 88% of small and midsize supply chain professionals plan to switch, at least some of their suppliers, to ones that are closer to the US, and 45% plan to switch all of them.”

It appears that incentives from the American government, like the CHIPS Act, combined with China trade sanctions and the Russian-Ukraine War, are a massive catalyst for nearshoring in 2023 and beyond.


Nearshoring manufacturing can be a good strategy for companies looking to reduce costs, improve quality and resilience, and speed up TTM.

Although there are challenges, strong incentives like the CHIPS Act and other government stimuli push companies to be more creative, and nearshoring, for now, is a good bet.

But as we all know, the climate can quickly change, so businesses need to be on the lookout and not bet on one single solution.