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Supply chain shortages could bring more factories to the US

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Posted at 10:11 AM, May 17, 2022

Two years of supply chain issues have some companies making long-term changes to how they operate, building more resiliency and redundancy into their shipments.

COVID-19-related lockdowns in China have supply chain experts watching. The lockdowns in China could begin affecting product availability in the U.S. in the coming months.

“You have to build some redundancy in your production,” said Scott Paul, president of Alliance of American Manufacturing. “You can't rely on a chip from a factory that may not be there for a year because of either a backlog or some other disruption and you want to be able to control your inventories and some of your other costs a little better.”

Lower energy costs in the United States compared to the rest of the world may also help with shifting more production here.

“I'm also a proponent of a globalized supply chain,” said Patrick Panfield, professor of supply chain practice at Syracuse University. "I believe in trade, I think trade is really what makes the world go around. My concern is again, those situations where we're very dependent on other countries for pharmaceuticals and high technology and medical devices.”

Energy costs and COVID-19 lockdowns are not the only concerns supply chain management experts expressed.

“The biggest obstacle is not labor cost differential because that's a very small part of manufacturing these days,” said Paul. “The bigger challenges may be for industries that virtually disappeared altogether. It's very hard to build something from the ground up now.”

In the future, Paul said that he thinks the cost of carbon emissions will be included in products in a way they haven't been in the past, but it could be what causes factories to move closer to customers.