Shortcomings in long-distance supply chains came to light during the COVID-19 pandemic, when manufacturing and shipping functions from countries such as China found themselves greatly curtailed—with building products manufacturers among the hardest hit. The MIT Sloan Management Review article “Is It Time to Rethink Globalized Supply Chains?” by Harvard Business School professor Willy Shih wasted no words in pointing out that “the COVID-19 pandemic should be a wake-up call for managers and prompt them to consider actions that will improve their resilience to future shocks.”
Reshoring, or bringing manufacturing back to North America, is one of the top actions a manufacturer can take. It brings a number of benefits to developers and builders—from a more responsive supply chain to a more sustainable carbon footprint—that ultimately benefits the residents, too. Here are four benefits that rise to the top.
1. A streamlined, more responsive supply chain. Manufacturing closer to home simplifies the supply chain and allows it to respond to market demands more quickly. “What we found post-COVID was that you could get blindsided with demand you weren’t anticipating, or demand of your product could shift to other product categories—and this volatility in demand is very difficult to react to if you’re doing manufacturing outside of North America,” says Brian Humphreys, director of sales for the builder channel, Kitchen & Bath, at Kohler Co. “In order to service developers better and faster, it’s important to position yourself to react to that demand quickly.” Not doing so—or in cases where it’s not an option—requires extra planning, notes Nick Buckley, director of North America faucet operations, Kitchen & Bath, at Kohler Co. “Anything with a long supply chain means you need to absorb the volatility,” he says.
But logistics success depends on more than just strategic location. Manufacturing operations also need to understand what products are leading from a sales perspective and have the highest volume of demand. “The connection between operations and sales and marketing—so that everybody’s on the same page of what we’re manufacturing and where—is a really big deal,” Humphreys says.
For building products manufacturers, “where” also means placing plants close to where housing is hot. “In some markets, we’re seeing incredible growth, and, in some markets, we’re seeing a slowdown,” Humphreys says. “So it’s not just about having consistent supply. It’s about having that supply in the right place at the right time with the right customers.”
2. A more resilient supply chain. The COVID-19 pandemic saw manufacturing and shipping come to a standstill throughout much of the world, with empty shelves highlighting the vulnerabilities of global supply chains. Bringing manufacturing closer to home helps mitigate these risks by reducing dependency on overseas suppliers and increasing control of supply chains. “What the pandemic exposed is that we’re way too reliant on a single kind of supply chain coming into the U.S.,” Buckley says.
Geopolitical uncertainties—whether or not anything of concern comes to fruition—can also weigh down on global supply chains, resulting in higher costs and delays. “Diversification is really going to benefit us going forward,” Buckley says.
3. Job creation and boosting local economies. Bringing manufacturing back to North America also helps create jobs and stimulate local economies. According to the Society of Manufacturing Engineers, nearly 365,000 U.S. manufacturing jobs were announced through reshoring and foreign direct investment in 2022, a significant increase from previous years. This job creation increases consumer spending power that, in turn, benefits other sectors of the economy, including retail and services.
Building relationships with trade associations and local government agencies helps ensure reshoring success, as does assessing a market for local talent. When Kohler considered expanding its plant in Monterrey, Mexico, for example, a strong technical university that includes a focus on automation factored into the decision. “Making sure you have that good inflow of talent for automation and programming is key,” Buckley says.
4. Sustainability and a reduced carbon footprint. The National Kitchen & Bath Association reported in its 2023 Design Trends report that a majority (64%) of designers, architects, dealers, and kitchen and bath contractors say they consider a manufacturer’s sustainability practices and that they believe sustainability will play a large role in how kitchens and baths look, feel, and perform for years to come. Shorter supply chains—with lower transportation emissions—factor into reducing a company’s carbon footprint.
So, too, do sustainable manufacturing processes. At Kohler’s new facility in Casa Grande, Arizona, which opened in May and produces Sterling bath and shower fixtures, an electric micro-grid has reduced 90% of the CO2 emissions coming from the operation. And in Monterrey, Mexico, innovations in the manufacturing process have reduced water and energy consumption tied to the plating process. Plating lines—typically heavy on water consumption—now use reclaimed water and have shifted to electric where possible. “So now, we can have a closed-loop kind of process,” Buckley says.
A reshoring success story. Developers are already benefiting from Kohler’s reshoring investments in Casa Grande and Mexico’s Monterrey and Bahia. For example, with Kohler’s plant expansion in Monterrey, what once took products 90 days to travel from overseas now takes only 10 days to travel to a Kohler distribution center in Texas.
“Many of our developers knew about these plants well ahead of them being built and why we were building them,” Humphreys says. “It’s not enough to have a great brand and to have cool designs. You have to be able to provide the supply when it’s needed, where it’s needed, consistently.”
See firsthand the investments Kohler has made in North America Infrastructure.
