Coming Home: Reshoring and the Welding Industry
by Rob Goldiez, on Nov 17, 2021 8:30:00 AM
In the USA and other parts of the world, the Covid-19 pandemic shed new light on reshoring efforts of the government as the supply chain crumbled. This crumbling of the supply chain caused a standstill in the manufacturing industry. Raw materials and finished products were stuck in ports in China waiting for the signal to sail.
This awakening prompted the USA and other countries to make an effort to reshore their industries into their own countries. This influx of fabrication works impacts the welding industry on income and employment. Yet, a sudden influx of fabricating jobs can put extra pressure and exacerbate the welding shortage the industry is currently experiencing. Medium-sized welding businesses are especially experiencing this shortage of labor. The large and medium-sized welding businesses are turning to automation to augment the problem to solve the situation.
What is the Welder Shortage?
The world is experiencing a shortage of qualified welding professionals. This problem is not only confined to the United States. Countries like Australia and Belgium are experiencing this problem as well. The American Welder Association in the USA is predicting by 2024. There will be about 400,000 welding jobs unfilled in the United States alone.
What is Reshoring?
Reshoring is the process of bringing back manufacturing from overseas (offshore) locations. It’s the opposite of offshoring which means moving manufacturing off your shores mainly to China.
Manufacturing companies outsource their manufacturing because of two things. These things are lower labor costs and lower overhead costs. The top companies that outsource their manufacturing are Apple, Nike, Walmart, IBM, and Cisco Systems in the USA.
Reshoring in the USA
The concept of reshoring is not a new idea in the USA. Politicians and the chambers of commerce have always promoted the benefits of domestic manufacturing. However, no matter how much incentive, or political promise they gave, there was little to no interest in reshoring manufacturing. When President Trump came into power, he attempted to entice manufacturers to reshore. He did this with two bills. The first 2017 tax reform bill reduced the tax rate for manufacturers. The second initiative was in 2018. This initiative involved a series of tariffs and quotas on steel and hundreds of tariffs on goods imported from China.
Both were ineffective until the COVID pandemic bought a new element into the equation: disruption of the supply chain. In addition to the challenges of the COVID-19, manufacturing companies now have to deal with more problems. These problems include late deliveries, lost production, and higher costs of transportation. In these, the welding industry was not exempt from the effects of the supply chain disruption. Many welding firms struggled to wait for supplies coming from Asia. This long wait resulted in late work and missed deadlines. It’s estimated that the damage from the supply chain disruption will reach about 4 billion dollars.
Industries with Reshoring Priority
To determine which industries are ripe for reshoring, a study by Duff&Phelps developed an index. This index includes criteria like cost and risk. They use it to evaluate 28 US manufacturing industry sectors identified by the North American Industry Classification. They ranked these sectors. The researchers determined which industry has the highest priority of reshoring based on the scores. Here are the top industries most likely to restore:
- Automobile parts and equipment. This industry is most likely to be reshored. This is because it's deemed critical by the Department of Homeland Security (DHS) and Intellectual Property(IP). Quality and safety are the main concerns of this industry when it restores. The main challenge is to meet safety standards for raw materials and manufacturing techniques.
- Aerospace parts. This industry is also tagged as critical for reshoring by the DHS and IP. The main concerns for this industry are innovation, quality, and safety. There is also a concern for skilled labor in this industry.
- Communications equipment. This industry is also tagged as critical for reshoring by the IP and DHS. Since this industry is primarily automated, the main concern shifted to innovation and safety.
What Will be the Impact of Reshoring on the Welding Industry
To understand the impact of reshoring in the welding industry, we look at the sectors that have the highest priority of restoring. These industries are automobile parts, aerospace parts, and communications equipment, to name a few. These are all different industries, but they all have features needing fabrication. It’s easy to see that reshoring manufacturers will increase the number of jobs for the welding industry.
Reshoring can favor the welding industry because it means more work. More work means more profit for welding businesses. However, it can also exacerbate the welder shortage problem the sector is currently experiencing. As more and more jobs come in for the welding industry, how will they handle it?
The answer is automation. The welding industry needs to upgrade and automate its welding processes. Doing this will help to keep up with the incoming demand despite the labor shortage.
Automation can come in the form of welding robots. Welding robots can be industrial robots for high volume and fixed production and cobots for medium-sized enterprises with high-mix and low-volume welding productions.
Many manufacturing industries are coming back to US shores. Are you ready to benefit from this surge?
Choose the Best Welding Robot
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