ABB: Supply Chain Issues Driving Reshoring and Nearshoring

June 30, 2022

70% plan to reshore or nearshore to address supply chain issues, 43% will use automation and robotics to build supply chain resilience

In response to the COVID-19 pandemic, geopolitical disputes, raw materials shortages and trade issues that have rocked global economies and supply chains, a majority of U.S.-based companies are planning to relocate production closer to home.

Surveying 1,610 executives in the U.S. and Europe, ABB found that 70% of U.S. businesses are planning changes in their operations, with 37% planning to bring production back home and 33% looking to nearshore and shift their operations to a closer location.

“Business leaders are responding to unprecedented supply chain disruptions by putting into place measures to make operations more resilient and adaptable,” said Sami Atiya President of ABB’s Robotics & Discrete Automation Business, at SelectUSA. “While investment in automation plays a key role in flexibility in operations, equally important is investment in education, vocational training, and apprenticeship programs needed to create safer, higher-paying jobs for American workers.”

Atiya explained how the increasing need for flexibility and resilience in production is driving the interest in reshoring/nearshoring and, as a result, the demand for more automation. He underscored the role of robotics in facilitating reshoring or nearshoring efforts, addressing supply chain concerns and maintaining global competitiveness for U.S. businesses.

John Santagate the Vice President of Robotics & Voice at Körber Supply Chain Software noted, "When we look at the recent supply chain disruptions, not so from the manufacturing side, but specifically at Logistics it points out the fragility and risk in current models. Yes, during the pandemic manufacturing capacity slowed down significantly and this has a major impact on supply chain performance. However, this likely would have occurred whether manufacturing was local or outsourced. Where the logistical challenges occurred, that will drive re-shore and near-shore decisions, is in the congestion at ports and the blockage at the Suez Canal. These issues placed major strain on supply chains as the material on board became massively delayed in reaching its destination.

The near-term relocating of supply chain operations to nearer the end customer is certainly a positive thing. We see this as beneficial to the enterprise as well as beneficial to the consumer and the local economies. However, the question remains, will we see this action materialize? We’ve been having this discussion for many years now, as the cost of labor in historical low cost countries has increased. The bottom line is that supply chain management is a board room issue and the best run companies emphasize supply chain resiliency and responsiveness at the highest levels of the organization."

Bob Bova the President and CEO of AccuSpeechMobile added, "As American companies reshore their distribution operations, the need for warehousing, employees and new technology will see another growth bump like we did during Covid. Technologies like AccuSpeechMobile’s device base voice automation will ease the need for as many workers and get them up to rate in half the time, automate and streamline new WMS mobile applications and provide a technology that can easily deploy, be agile for changes and provide an ROI in less than 12 months."

Once confined to the automotive industry, automation and robotics have significantly expanded across multiple industries and sectors across the United States, including logistics, food and beverage, retail, and healthcare. American companies are increasingly turning to automation and robotics driven by the need for greater flexibility in operations, widespread labor shortages and an aging workforce.

According to the International Federation of Robotics, the increase in robot density per 10,000 workers in North America, jumped 28% in Q1 2022 compared to the first quarter of 2021, the highest rate of growth since records have been kept. While in one sector alone, the American Welding Society says the US will face a shortage of 400,000 welders by 2024.

ABB’s study also found that American companies are relying more on automation to solve their supply chain woes. 43% of businesses surveyed indicated that they will use automation and robotics to build supply chain resilience, with 75% of US-based businesses noting that robotics and automation will play a significant role in addressing supply chain issues.

Although there is a greater demand for robotics in the United States, ABB’s survey found that the rate of investment in automation remains higher in Europe, with 74% of European businesses indicating they will invest in robotics and automation in the next three years — compared to 62% in the US.

The role of automation and robotics in reshoring or nearshoring operations in the U.S. also depends on bridging the skills gap in robotics education and better educating and upskilling workers.

“Robotics and automation are job creators, requiring new ways of working with new skillsets,” noted Atiya “We are working with the U.S. government to share ABB’s experience in the US and other countries where we operate on how we can accelerate robotics and automation education, vocational training, and apprenticeship programs needed to create safer, and higher-paying jobs for American workers.”

Atiya presented at Select USA Tech: The Future of High-Tech Industries alongside other companies including Softbank Group International, GymPass and A-to-Be. In addition to talking about automation and robotics and the growing move to bring production closer to home, Atiya also noted that the business-friendly environment and level of entrepreneurship in the United States fuels ABB’s own innovation and growth there.