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In the 1990s, offshoring became a trend among U.S. companies. With more affordable labor available abroad (primarily in China), some entities relocated factories to lower production costs and increase profits. Offshoring relies on shipping those products back overseas for sale in the United States.
For decades, this model was working. Then came the pandemic, and the resulting supply chain disruptions (especially for overseas shipments) began to poke holes in offshoring strategies. With products stuck overseas sometimes for months on end, the drawbacks of offshoring started to outweigh the benefits.
Lessons learned from the last few years have prompted some companies to bring operations back to North America, specifically to Mexico. Establishing production facilities closer to end markets minimizes the impacts of potential supply chain disruptions while keeping costs in check. This is the genesis of the nearshoring trend.
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