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 maintaining talent and manufacturing processes in Canadian soil made 2020 one of the most profitable years to date as we were able to double our revenue during the pandemic. The growth we experienced in 2020 correlates to local businesses understanding offshoring constraints and facing burdensome 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. Now, we are confident that reshoring initiatives will help us diversify the industries we work with while increasing economic gains and benefiting our people. Through these initiatives, we can create more jobs to meet demand and consequently have a skilled workforce in Canada that will allow us to regain lost skills and abilities from moving processes overseas.
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 that reshoring efforts must continue to disrupt the flawed system and permanently change how we manufacture goods. 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 also need to invest within the company to have the necessary equipment and capacity to fulfill demand and provide competitive pricing. Lastly, companies need to understand the importance of collaboration. Learning and sharing the knowledge from past projects will be critical for industries to have a more substantial foundation in Canada. As a company, we believe that knowing the extent of our abilities will allow us to partner with others who can do what we can’t and refrain from investing in resources that are not worth it 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 this topic and how you think reshoring will benefit your business and industries in Canada.
Let us know by email or comment in our social media channels.