U.S. manufacturers are increasingly moving production operations closer to consumer markets. Across the industrial sector, reshoring, nearshoring, and onshoring activities have surged post-pandemic as companies adapt their manufacturing and warehousing strategies. This shift aims to eliminate supply chain vulnerabilities exposed by the pandemic and create a more resilient, and long-term manufacturing process.
Manufacturing Sector Background
Onshoring follows decades of offshoring, with many companies relocating to regions like China for cost savings. Research by the Reshoring Institute indicates the U.S. lost five million manufacturing jobs between 2000 and 2014. Initially, the cost-cutting approach drove profitability, but pandemic disruptions underscored its limitations, leaving some companies exposed. Many companies are not fully pulling out of existing markets like China and India but are instead augmenting their production with new facilities closer to end markets. Not all industries will return to U.S. shores — lower-cost goods like clothing may remain offshore — but the current shift signifies a gradual, strategic transition.
Onshoring or Nearshoring Examples
A growing segment of consumers values “Made in the USA” products, favoring perceived quality, safety, and local job support. The automotive sector exemplifies this trend; BMW’s facility in South Carolina has been a model for three decades, and Tesla’s recent nearshoring strategy in Mexico further supports the approach.
The shift to nearshoring is also being facilitated as markets changed from the NAFTA guidelines to the USMCA program instituted in 2020. That allows companies to locate manufacturing facilities in Mexico where they can utilize lower labor costs and take advantage of nonexistent tariffs for products that meet USMCA’s requirements.
Mexico may be the biggest beneficiary of the nearshoring trend, which in turn will likely trickle down to a few Southern U.S. states. Mexico has also heavily invested in infrastructure and educational platforms that support higher-paying jobs such as engineering and other technical positions, reinforcing its attractiveness as a nearshoring location. It remains unclear how nearshoring will impact markets on the West Coast. There is the potential that it could eventually decrease imports and port traffic, though the U.S. could also experience an increase in supply chain activity from Mexico. In 2023, Mexico overtook China to become the largest trading partner of the United States, accounting for 15.7% of total trade; China and Canada accounted for 15.3% and 11.0%, respectively.
Agility and Resiliency
Manufacturing closer to U.S. markets enhances agility. The pandemic showed the risks of distant supply chains, with automotive and electronics sectors facing severe delays due to overseas manufacturing bottlenecks. Onshoring and nearshoring improve responsiveness, reduce inventory requirements, and improve quality control by bringing production closer to markets.
Beyond manufacturing growth, the reshoring trend has also boosted the U.S. job market. Over 350,000 jobs were reshored in 2022 — a 25% increase from 2021 — as companies reestablished or expanded U.S.-based facilities. This job growth has spurred increased demand across the industrial sector — including for manufacturing, warehousing, and distribution facilities — creating fresh opportunities within the real estate industry.
Onshoring and nearshoring also address supply chain vulnerabilities that emerged during the pandemic, prompting companies to diversify product sources, protect intellectual property, and capitalize on government incentive programs. Given the modern supply chain’s dependency on rapid delivery times, last-mile distribution facilities are increasingly sought after in urban centers, where they support reduced delivery costs and help achieve sustainability goals. Together, these factors are driving new demand and expansion opportunities for industrial developers, investors, and operators across the U.S., as onshoring and nearshoring strategies continue to evolve. This momentum is expected to grow over the foreseeable future, positioning these strategies as key components in the changing global supply chain landscape.
View the full article by Kidder Matthews COO Brian Hatcher here
