Onshoring to the USA and the Capital Sources Available to Do It

The United States looks to be entering a promising new chapter in its business playbook.

With the pandemic rocking supply-chains around the world, the idea of moving production to the U.S. has gained traction and, in some cases, has already been put into action. Regardless of political affiliation, "America-made" has a good ring to a growing group of consumers who do not want to wait for parts from overseas or prefer to grow their blueberries in Maine.

In a time of unbridled demand, avoiding supply shortages is critical, and that can mean taking the necessary steps to shorten the supply chain.

In the food category, this has become attractive with the growing trend of farm-to-table dining: The closer to the farm, the better the quality label in many people's eyes.

In a recent New York Times article[1] about homegrown products, a young apparel brand has made the decision to have their products manufactured in the United States, utilizing domestic labor rather than outsourcing to Asia. The Times also reported[2] that, during the pandemic, as home furnishing projects soared, local furniture production developed to meet demand for sofas that would otherwise have been stuck in backlog.

The energy sector is also loosening its dependence on foreign markets. As it moves toward reliable energy supplies, solar energy has gained attention as an attractive alternative to oil.

Given the increasing momentum in domestic production, companies can expect to need capital to grease their wheels, especially now that government stimulus programs have dried up.

Companies can turn to the age-old technique of factoring offered by trade finance companies. In this process, they get their invoices paid in advance, rather than waiting the 30-plus days that buyers often take to pay their bills. Since some of these start-up U.S. companies have not been in business long, domestic factoring provided by firms like Tradewind Finance can be a good solution because the financing is based on the retailer's financial records, rather than the start-up’s. Not only that, funds from factoring services can increase as sales grow. While it may be difficult for small and medium-sized companies to obtain a traditional loan because of the strict borrowing standards associated with banks, companies of this size can expect to find more flexibility from alternative lenders like Tradewind.

Expanding production in America makes sense. You do not have to look much further than the crowded ports of California to see that moving supply chains to U.S. soil can reduce order delays - and costs. Freight costs combined with container shortages have made shipping from overseas a costly and hectic ordeal.

There is also something to be said about the role that factories play in American history. Communities are built on them, and without factories, livelihoods are at risk. As reported by the United States Census Bureau, manufacturing is among the top five largest employers in the United States.

More American-made goods can help not only factory workers, but also farmers who face their own challenges, such as finding sufficient demand for their crops.

Onshoring can support manufacturing and other local jobs in the U.S. while meeting consumer needs and preferences.

Now that seems like a win-win play.

[1] “Supply Chain Woes Prompt a New Push to Revive U.S. Factories”, New York Times, January 5, 2022

[2] “North Carolina’s Furniture Hub Is Booming. What Comes Next?”, New York Times, November 27, 2021