In 2025, Original Equipment Manufacturers (OEMs) must choose between nearshoring—relocating production to nearby regions like Mexico or Canada for faster response times—and offshoring to cost-effective distant locations such as Asia. With tariffs escalating to 50% on key imports like steel, aluminum, and copper as of July, geopolitical instability, and rising demand for agile operations, pure models of either approach come with trade-offs. Offshoring delivers significant labor cost reductions, while nearshoring emphasizes resilience and speed—but a hybrid strategy, blending offshore production with domestic Just-in-Time (JIT) inventory, offers the optimal balance by capturing low-cost global sourcing alongside local agility and risk mitigation. This approach is gaining momentum, with 80% of chief operating officers planning to expand nearshoring or onshoring elements over the next three years, often integrated into hybrid frameworks (PwC CEO Survey).

This guide dives into current trends, comparisons, and hybrid solutions for procurement leaders searching for “hybrid supply chain strategies 2025” or “OEM offshoring with domestic inventory.”

Key Supply Chain Challenges for OEMs in 2025

As of July 2025, OEMs face intensified volatility from tariffs, labor constraints, and external shocks like climate events and trade wars. Here’s an updated data snapshot:

• Revenue impacts from disruptions affect 94% of companies, with average losses reaching 8% of annual earnings amid a 38% year-over-year rise in global incidents (Procurement Tactics).
• About 80% of organizations report high or very high supply chain risks, with major disruptions occurring every 3.7 years and often lasting over a month (RapidRatings 2025 Risk Survey).
• Tariffs starting at 25% on steel and aluminum have escalated to 50% as of June, disrupting Guangdong, Chinan production and adding 25–50%+ to landed costs in sectors like automotive and electronics (AP News – Tariff Impact).
• 78% of firms have adopted inventory buffering or supplier diversification for resilience, up 14% year-over-year as companies build strategic stocks to counter uncertainties (RapidRatings 2025 Risk Survey).
• Digital tools are surging, with 53% of leaders using AI to anticipate disruptions and 50% testing generative AI for forecasting, potentially reducing logistics costs by 5–20% (PwC Digital Supply Chain Survey; Forbes AI in Logistics).

These dynamics highlight the need for flexible strategies that leverage offshore efficiencies without exposing OEMs to full disruption risks, making hybrids a key focus for 2025.

Nearshoring vs. Offshoring: A Side-by-Side Comparison for 2025—with Hybrid Insights

Based on July 2025 trends, nearshoring is accelerating for risk reduction, while offshoring holds strong for cost savings—but hybrids combining both are emerging as the go-to for OEMs, offering 10–20% shipping cost reductions and enhanced scalability. Here’s a comparison, including how hybrids bridge the gaps:

Source: Aggregated from 2025 industry reports on tariffs, disruptions, and OEM trends (Financial Times, PwC Survey, RapidRatings, PwC Digital Supply Chain).

Nearshoring edges out for OEMs prioritizing speed, with many reshaping chains accordingly.

The Strategic Edge of Hybrid Models with Domestic JIT Inventory for OEMs

Hybrid supply chains—like offshoring production while maintaining domestic JIT warehousing—directly tackle July 2025’s realities, where tariffs average 18.2% and disruptions hit 80% of firms. By producing offshore for cost savings and stocking in the U.S., OEMs slash ocean delays, optimize duties via bulk imports, and build resilience without excess inventory. Key benefits include:

• Accelerated Fulfillment:Domestic shipments (e.g., from Guangdong, China) in 1–3 days reduce offshore timelines by up to 90%, enabling urgent adaptations amid volatility.
• Tariff and Cost Optimization:Bulk offshore shipments minimize per-unit duties (avoiding 50% spikes on copper/steel), with predictable landed costs and 20–30% lower holding expenses (AP News).
• Enhanced Resilience:Local buffers protect against port congestion and supplier issues, supporting the 78% of firms adopting similar strategies for faster recovery.
• AI-Driven Visibility:Real-time tracking integrates with platforms, leveraging 53% AI adoption to forecast risks and cut logistics costs by 5–20% (PwC Digital Supply Chain).

GreatLight Metal leads with this hybrid, using offshore manufacturing paired with Guangdong, China JIT to deliver global efficiencies with domestic reliability.

Why Partner with GreatLight for Your 2025 Supply Chain?

GreatLight’s offshoring-with-JIT model empowers OEMs in today’s high-tariff environment with:

• Custom Agility:Respond to demand surges or changes without overstocking, using AI dashboards for data-driven decisions that enhance productivity by 15–25%.
• Proven Efficiency:Bulk imports reduce tariff hits while ensuring ESG compliance and sustainability, turning 2025 challenges into advantages.

Ready to Strengthen Your OEM Supply Chain?

Request a Free Delivery & Cost Analysis from GreatLight

Discover how our hybrid approach can cut lead times, buffer against disruptions, and optimize costs tailored to your needs. Contact GreatLight International today or request a custom quote to blend offshore savings with domestic precision for a resilient 2025.

In today’s manufacturing landscape, integrating artificial intelligence (AI), 3D printing, and advanced analytics into investment casting is setting new standards for sourcing efficiency, quality, and value. These digital technologies are transforming how components are produced and how organizations optimize budgets, timelines, and sustainability.

AI: The Engine of Intelligent Casting

AI is at the heart of modern investment casting, automating quality control, predicting process outcomes, and optimizing production variables in real time. This enables:

• Predictive Quality Assurance: AI algorithms analyze digital designs and process data to forecast potential casting flaws—such as shrinkage or porosity—before production begins, reducing costly rejects and rework.
• Automated Defect Detection: AI-powered imaging systems scan castings for microscopic defects, ensuring every part meets strict industry standards for critical applications.
• Dynamic Process Optimization: Machine learning models continuously adjust variables like temperature and cooling rates, maximizing efficiency and maintaining predictable costs.

Analytical Data Point: Global spending on AI systems is projected to reach over $204 billion by 2025, reflecting a compound annual growth rate (CAGR) of 24.5% as organizations across industries invest in AI for efficiency and innovation (Read more).

3D Printing: Accelerating Sourcing and Reducing Costs

3D printing, enhanced by AI-driven design, is revolutionizing pattern and prototype creation for investment casting. Benefits include:

• Rapid Turnaround: AI streamlines the transition from CAD models to 3D-printed patterns, enabling production in days rather than weeks.
• Complex Geometries: Generative design powered by AI creates intricate, lightweight structures that traditional tooling cannot achieve.
• Cost and Sustainability: 3D printing minimizes material usage and waste, aligning with sustainability goals and reducing upfront costs for prototypes and low-volume runs.

Analytical Data Point: According to industry research, 40% of manufacturers cite cost savings as a key benefit of 3D printing, particularly for complex, low-to-medium volume components (See details).

Analytics: Data-Driven Sourcing for Better Outcomes

AI-powered analytics provide actionable insights that streamline sourcing and drive value at every stage:

• Predictable Timelines: Analytics forecast production schedules accurately, helping organizations plan confidently and avoid supply chain disruptions.
• Cost Optimization: Data-driven insights identify process efficiencies and cost-saving opportunities without sacrificing quality.
• Full Transparency: Real-time dashboards powered by AI provide visibility into every step of production, keeping stakeholders informed and proactive.

Why Digital Innovation Matters

These technologies are redefining sourcing and supply chain management in manufacturing:

• Meet Tight Budgets and Timelines: AI-enabled processes reduce costs and speed up delivery.
• Source High-Precision Parts: Consistent, data-driven quality across industries like aerospace, automotive, medical, and energy.
• Partner with a Digital Innovator: GreatLight’s commitment to AI, quality, and sustainability aligns with modern strategic sourcing goals.

GreatLight: Your AI-Driven Casting Partner

With decades of experience and a relentless focus on AI-powered innovation, GreatLight Metal is your trusted partner for precision investment casting, machining, and custom engineering solutions. Our integration of AI, analytics, and 3D printing ensures objectives are met—on spec, on budget, and on schedule.

Ready to Transform Your Sourcing?

The future of investment casting is AI-driven, built for those who demand efficiency, quality, and value. Discover how GreatLight International’s AI, 3D printing, and analytics can optimize your sourcing strategy.

The Hidden Pitfalls of Standard RFQs

Industry analytics show that standard RFQs often fail to meet the needs of today’s complex supply chains:

• Treating Engineered Components Like Commodities:Oversimplified RFQs signal a lack of understanding to specialized suppliers. According to recent procurement surveys, up to 80% of RFQs still focus primarily on price, missing opportunities for collaboration and innovation.
• Lacking Technical Context or Performance Expectations:Vague or incomplete specifications force suppliers to guess, leading to higher rejection rates and longer sourcing cycles. Data from 2025 indicates that companies with unclear RFQs experience 20% more supplier dropouts.
• Overemphasizing Price Over Quality and Value:While cost reduction remains a top priority—cited by 78% of procurement leaders in the latest Hackett Group Report—focusing only on price can result in lower quality, higher rejection rates, and less resilient supply chains.

What Top Suppliers Really Want from Your RFQ

The latest analytics and supplier feedback highlight key expectations:

• Complete and Realistic Specifications:Suppliers report that detailed drawings, material requirements, and tolerance ranges are critical for accurate quotes and successful partnerships.
• Opportunities for Engineering Collaboration:In 2025, 65% of top suppliers say they prefer RFQs that invite design-for-manufacturability (DFM) input, leading to better outcomes and stronger relationships.
• Clear Production Timelines and Volume Forecasts:Transparent scheduling and volume projections help suppliers plan efficiently, reducing lead times by up to 15% for companies that share this data.

The Real Cost of Losing Tier-1 Suppliers

Analytics reveal significant impacts when high-quality suppliers decline your RFQs:

• Higher Rejection Rates and Production Line Stops:Companies relying on lower-tier suppliers report 20% more quality rejections and more frequent production halts.
• Longer Lead Times Due to Frequent Supplier Changes:Unreliable partners force constant re-sourcing, increasing lead times and inflating costs.
• Missed Opportunities for IP and DFM Collaboration:Elite suppliers bring proprietary expertise and process improvements. Missing their input can limit your competitive edge and innovation potential.

Quick Fixes to Make Your RFQ Supplier-Friendly

Data-driven best practices for 2025:

• Add Tolerance Ranges and Application Notes:Include specific tolerances, environmental conditions, or end-use details to clarify expectations and reduce guesswork.
• Incorporate TCO, Not Just Price:Highlight that you value durability, lead time reliability, and service over the lowest upfront cost. Companies that evaluate total cost of ownership (TCO) see 15–20% better supplier retention.
• Ask for Feedback, Not Just a Quote:Invite suppliers to suggest improvements or flag concerns. This approach fosters trust and uncovers optimization opportunities, with 65% of suppliers reporting higher satisfaction when their input is valued.

Analytics in Action: What the Numbers Say

Recent industry analytics provide compelling evidence for RFQ optimization:

• Supplier Retention:Companies that collaborate with suppliers during the RFQ process increase supplier retention by up to 30%.
• Lead Time Reduction:Organizations that share clear timelines and volume forecasts with suppliers reduce lead times by an average of 15%.
• Quality Improvements:Transparent, collaborative RFQs result in 20% fewer quality rejections and more reliable production outcomes.

Tools like Google Analytics, Hotjar, and AI-powered procurement platforms (e.g., ProQsmart, Part Analytics RFQ IQ) enable teams to track engagement, supplier responses, and sourcing efficiency in real time.

Conclusion: Rethink RFQs as Invitations to Collaborate

Your RFQ isn’t just a transaction—it’s the start of a partnership. By framing it as an invitation to collaborate rather than a rigid demand, you’ll attract suppliers who bring expertise, reliability, and innovation to the table. The latest analytics show that companies embracing this approach are outperforming their peers in supplier retention, lead time reduction, and overall supply chain resilience.

Ready to optimize your RFQ process?

Visit GreatLight Metal for expert guidance on precision-machined components and supplier partnerships. Start by auditing your current RFQ templates and prioritizing clarity, collaboration, and value. Your future suppliers—and your bottom line—will thank you.

Swift Lesson #1: Control Your Supply Chain (and Your Masters)
Taylor Swift’s re-recording of her early albums to regain ownership of her masters highlights the power of control. In supply chains, this translates to owning supplier relationships. Analytical data shows that companies with diversified supplier networks reduce supply disruption risks by up to 30% (Gartner, 2024). By fostering transparent partnerships, OEMs can optimize quality, pricing, and delivery timelines. Swift’s control over her creative assets mirrors how diversifying suppliers and negotiating strategic terms can secure your supply chain.

Key Takeaway: Use supplier relationship management (SRM) software to analyze dependency risks. Aim for a diversified network to enhance control, just like Swift’s masters.

Swift Lesson #2: React Fast, Release Faster
Swift’s surprise album drops, like Folklore and Evermore, demonstrate rapid responses to market trends. Supply chains face similar pressures from disruptions like raw material shortages or demand spikes. Predictive analytics can reduce response times by 25% by forecasting disruptions (McKinsey, 2025). By integrating real-time data, supply chain leaders can adjust sourcing or production plans swiftly, much like Swift capitalizes on cultural moments to release music.

Key Takeaway: Deploy predictive analytics tools to monitor supply chain risks. A 10% improvement in response time can boost customer satisfaction by 15%.

Swift Lesson #3: Navigate Tariffs Like Swift Navigates Headlines
Swift’s ability to manage public perception during controversies parallels strategic tariff navigation. In 2025, tariffs on imports from certain regions have increased costs by 10-20% for some industries (Bloomberg, 2025). Prioritizing sourcing from India and Taiwan mitigates this. India’s manufacturing sector has grown 8% annually, offering cost-effective alternatives, while Taiwan’s semiconductor exports dominate 60% of the global market (Statista, 2025). Shifting 20% of sourcing to these regions can reduce tariff-related costs by up to 15% (Accenture, 2024).

Key Takeaway: Analyze tariff exposure using trade analytics platforms. Prioritize India for cost-effective manufacturing and Taiwan for high-tech components to cut costs.

Swift Lesson #4: Brand Loyalty Through Transparency
Swift’s candid fan communication builds unshakable loyalty, much like supply chain traceability fosters customer trust. Companies with transparent sourcing practices see a 12% increase in customer retention (Forrester, 2024). By sharing data on ethical sourcing and sustainability, brands differentiate in competitive markets. For example, blockchain-based traceability systems can verify supply chain integrity, mirroring Swift’s open dialogue with fans.

Key Takeaway: Implement traceability systems to share sourcing practices. Transparent brands can command a 10% price premium (Nielsen, 2024).

Swift Lesson #5: Constant Reinvention, Without Losing Core Values
Swift’s genre-spanning career—from country to indie-folk—shows reinvention while preserving identity. Supply chain leaders can adapt sourcing strategies to meet market shifts without compromising quality. For instance, reshoring 15% of production to India or Taiwan can reduce lead times by 20% while maintaining standards (PwC, 2025). Regular strategy reviews ensure alignment with trends, like Swift’s evolution.

Key Takeaway: Conduct quarterly sourcing reviews to align with market trends. Reinvention with core values intact can improve operational efficiency by 18% (Bain, 2024).

Swift Lesson #6: Maximize Margins Through Smart Merchandising
Swift’s merchandising empire—limited-edition vinyls and tour apparel—maximizes margins through strategic releases. In supply chains, strategic sourcing optimizes product lifetime value. Aligning sourcing with customer preferences can increase margins by 10-15% (EY, 2025). Sourcing from India and Taiwan further enhances profitability by leveraging cost advantages and tariff-friendly trade policies.

Key Takeaway: Use customer data analytics to prioritize high-margin products. Strategic
sourcing in India and Taiwan can boost profitability by 12% (KPMG, 2024).

Conclusion: If She Can Reinvent Herself, So Can Your Supply Chain Taylor Swift’s career proves that agility, control, and customer focus turn challenges into opportunities. For supply chain executives, her lessons—backed by data—highlight proactive strategies to navigate volatility, including tariffs. Channel your inner Swiftie by auditing your supplier network, prioritizing India and Taiwan for tariff resilience, and investing in analytics for faster decisions. If Taylor can reinvent herself album after album, your supply chain can, too.

Actionable Tip: This quarter, assess supplier risks with a focus on tariff exposure. Pilot a trade analytics tool to explore sourcing in India and Taiwan for cost and agility gains.

For more insights on optimizing your supply chain agility, visit GreatLight Metal.

A highly specialized precision component used in a fluid fitting for a servo sensor was provided to GreatLight for a manufacturability study.

An EV  sales team submitted the RFQ to our design engineers. To understand the pain points, our design team engaged directly with our engineering team — and what we discovered was eye-opening.

The original manufacturing process was as follows:

• Start with a solid 6061-T6 aluminum round bar
• CNC turning to machine shaft, steps, and grooves
• Secondary milling
• Deburring
• Ultrasonic cleaning

This approach, while effective in terms of quality, created three major challenges:

1. High manufacturing costs
2. Long lead times
3. Significant material waste

Because this component became a bottleneck in the company’s rapidly scaling production, they needed a more scalable, cost-effective solution.

Our Discovery

The original process involved:

• Multi-axis CNC machining from solid rod stock
• Extensive material waste due to deep cuts and tight tolerances
• Long cycle times that didn’t scale with growing demand

The GreatLight Breakthrough

We consulted with our manufacturing engineers in India to explore a better solution. The turning point came when we proposed creating a lost wax mold with sliding inserts intersecting at 90 degrees  for quick sample production— and everything changed.

We quickly developed the mold, produced 50 sample parts, and validated that the component could be manufactured using precision high-pressure  die casting.

The GreatLight Solution:High -Pressure Die Casting

After reviewing the geometry, load conditions, and material requirements, our team proposed a new approach:

Precision high-pressure aluminum die casting with minimal finish machining.

Key Improvements:

• 90% of the part formed by mold — only tight bores required post-machining
• Near-zero material waste
• Massively scalable production
• Shorter cycle times

The Result: 45% Cost Savings:

By shifting to die casting, we helped the company achieve:

• 45% reduction in manufacturing cost
• Dramatic reduction in production time
• Improved consistency and reduced handling steps
• Preservation of all critical tolerances and mechanical integrity

This was not just a cost-cutting initiative — it was a manufacturing breakthrough that scaled seamlessly with company’s growth.

Engineering details that made it work:

To make the die-cast solution successful, we:

• Designed custom die tooling optimized for the component geometry
• Engineered precise fill rates and cooling paths to prevent porosity or distortion
• Incorporated draft angles and fillets for castability while maintaining critical interfaces
• Post-cast machining was limited only to sealing and interface surfaces

All performance and compliance standards were fully met, including:

• Leak testing per ASTM A1047: 29 PSI for 5 minutes, <4 cc/min decay
• Environmental compliance: RoHS, REACH, GADSL
• Ultrasonic degreasing for internal system cleanliness

Final Thoughts Innovation In The Details:

At GreatLight Metal, we believe the biggest wins often come from rethinking the smallest components. By transforming the end fitting from fully-machined to precision-cast, we delivered:

• 45% cost savings
• Zero compromise on quality
• Scalability that increased the company’s  growth

This is what we mean by “Innovative Solutions in Motion.”

 Customer Reaction & Outcome

We presented the samples to client — and they were blown away. The parts passed assembly and functional testing, and GreatLight was ultimately awarded the full production contract.

While stockpiling provided short-term relief during the last trade war—helping businesses avoid immediate cost increases and keep production running—it also exposed significant downsides that manufacturers must carefully evaluate.

Short-Term Gains in Uncertain Times

For some industries, stockpiling during the 2018 trade war delivered tangible benefits. Automotive manufacturers secured key materials like aluminum and steel ahead of tariffs, sidestepping price surges that hit competitors who delayed action. Similarly, electronics companies stockpiled semiconductors and components, ensuring they could meet demand without passing higher costs onto consumers.

Data underscores how widespread this strategy became. In 2017, as trade tensions mounted, U.S. aluminum imports surged by 18% in the first ten months compared to the same period the previous year, according to the U.S. Department of Commerce. Semiconductor imports from China followed a similar pattern. According to S&P Global, imports jumped by 44.3% in the three months leading up to October 2018 as suppliers rushed to beat the tariffs. However, this was followed by a steep drop—falling 38.7% in October 2018 compared to the same month in 2017—highlighting how excess inventory quickly accumulated.

Consumer goods manufacturers also benefited. Companies reliant on Chinese imports for items like appliances and home electronics used stockpiling to stabilize prices and avoid supply chain disruptions. For these businesses, stockpiling provided a crucial buffer, helping them weather the initial wave of tariffs.

A Long War No One Expected

The benefits of stockpiling were built on a key assumption: that trade tensions would be short-lived. Few predicted that tariffs would persist across administrations, becoming a bipartisan tool in U.S. trade policy. Today, tariffs are no longer temporary disruptions but long-term realities manufacturers must plan for.

Under the Biden administration, the tariffs were retained and even expanded, with a focus on supporting key domestic industries through targeted exclusions. Tariffs were raised on critical imports like electric vehicles, solar cells, and steel and aluminum products to counter what the administration deemed unfair trade practices by China.

Now, with Trump back in office and announcing an additional 10% tariff on Chinese goods, manufacturers face another wave of trade uncertainty. It’s clear that strategies reliant solely on stockpiling are insufficient to address the long-term complexities of a tariff-driven trade environment.

Downsides That Manifested After the Trade War

The last trade war revealed several critical drawbacks of stockpiling:

• Cash Flow Strains: Stockpiling ties up substantial capital in inventory, limiting financial flexibility. For manufacturers operating on slim margins, this diversion of funds left little room to invest in opportunities or manage unforeseen challenges.
• Logistical Burdens: According to news reports, the Port of Los Angeles saw unprecedented activity leading to the 2018 trade war, making 2017 its busiest year on record. This surge drove regional warehouse occupancy to record levels, significantly increasing warehousing costs. Port congestion at Los Angeles and Long Beach compounded the problem, with delays costing some businesses up to $100 per container per day in demurrage fees. For smaller manufacturers, these costs were especially damaging.
• Missed Diversification Opportunities: Many companies prioritized stockpiling over diversifying their supply chains. This left them vulnerable as tariffs persisted and geopolitical tensions grew. A 2022 survey of more than 200 manufacturing executives by Deloitte and the Manufacturers Alliance found that manufacturers with diversified supply chains were far less affected by disruptions. Those relying on suppliers in a single region faced greater challenges.

Looking ahead, Trump’s proposed second-term agenda revisits familiar strategies like tax cuts, workforce development, and reshoring initiatives. But can these policies deliver the manufacturing revival they promise?

Tax Cuts and Tariffs: Revisiting a Mixed Legacy

Trump’s second-term plan to lower the corporate tax rate from 21% to 15% builds on the 2017 Tax Cuts and Jobs Act, which slashed the rate from 35% to 21% and temporarily bolstered manufacturing confidence. However, while some manufacturers used the savings to invest in operations, much of the financial windfall went toward stock buybacks rather than job creation or expansion, according to industry reports.

Tariffs remain central to Trump’s economic vision, with proposed levies targeting imports from China and Mexico. During his first term, tariffs on Chinese goods aimed to reduce trade imbalances and incentivize domestic production. While these measures spurred some reshoring activity, they also imposed higher material costs, particularly in sectors like automotive and electronics. Many manufacturers passed these costs on to consumers, as highlighted in an ABC News report.

Workforce Development: Can Vocational Training Bridge the Gap?

Addressing the manufacturing skills gap was a cornerstone of Trump’s first term. Initiatives like the Pledge to America’s Workers secured commitments from over 430 companies to create millions of training and education opportunities, underscoring a robust public-private effort. Yet the gap persists, with over 500,000 manufacturing jobs currently unfilled, according to the National Association of Manufacturers (NAM).

For a second term, Trump proposes an expanded focus on vocational training and apprenticeships, with an ambitious goal to integrate vocational programs into every high school curriculum. This approach aims to equip students with practical skills tailored to high-demand fields such as manufacturing, technology, and skilled trades. The revival of the National Council for the American Worker is also designed to strengthen connections between businesses, workers, and educational institutions.

Reshoring and Trade Policies: Aspirations Versus Constraints

Trump’s second-term agenda envisions an ambitious reshoring strategy, aiming to phase out imports of critical goods from China. This aligns with growing concerns among manufacturers about geopolitical risks and supply chain resilience. However, the reality of reshoring during Trump’s first term fell short of expectations.

According to industry reports, reshoring during Trump’s presidency was concentrated in a few high-profile cases rather than marking a broad industrial shift. Persistent cost advantages of overseas production and the growing role of automation continued to hinder widespread reshoring efforts. While the administration promoted prominent examples like Foxconn’s much-publicized but underwhelming investment in Wisconsin, these isolated instances did not translate into a significant manufacturing resurgence. Many companies continued to favor offshore operations, reflecting the challenges of reversing long-established globalization trends.

Moving Away from China: Examples in Action

Several companies are already preparing for what could be an unpredictable trade environment under a renewed Trump administration. By diversifying supply chains, these businesses are taking steps to reduce their exposure to the risks associated with sourcing solely from China.

Steve Madden, the popular footwear and accessories retailer, moved quickly following Trump’s election win, announcing plans to reduce its production in China by 40% within the next year. With over 70% of its U.S. inventory currently sourced from China, the company is implementing a proactive diversification plan to protect itself from potential new tariffs and the economic risks they could bring.

Similarly, Breville, known for its premium kitchen appliances, is relocating more of its production outside of China. In response to Trump’s victory, the company decided to accelerate its diversification efforts, underscoring the value of a resilient supply chain capable of weathering sudden policy changes.

Challenges Manufacturers Can Handle In-House

For other U.S. manufacturers considering a “China plus one” approach, some challenges can be managed internally. One major hurdle is the high switching cost associated with setting up operations or securing new suppliers in a different country. While it’s a considerable investment, companies that focus on long-term stability may find it worthwhile to reduce tariff exposure and benefit from lower labor costs in alternative regions—for instance, China’s manufacturing labor costs are nearly nine times higher than India’s.

Another challenge manufacturers can address independently is adopting a longer-term perspective. While many companies prioritize quick returns, approaching “China plus one” as a long-term strategy for supply chain resilience can make it more sustainable. Long-term contracts with Chinese suppliers may also restrict an immediate shift, but manufacturers can gradually diversify their sourcing as contracts come up for renewal.

The Role of Strategic Supply Chain Partners with a Dual Presence

While some challenges can be handled in-house, partnering with a strategic supply chain partner that has teams in both the U.S. and the target country, such as India, can significantly streamline the transition and mitigate risks. Strategic supply chain partners with established networks and experience in the target region can add value in several ways.

One of the primary advantages is supplier vetting and quality assurance. Strategic supply chain partners have deep familiarity with the local manufacturing landscape and can quickly identify reliable, high-quality suppliers, reducing the time and risks involved for U.S. manufacturers. Their established relationships help ensure consistent quality, a critical factor when shifting part of production to a new location.

Managing complex logistics is another area where strategic supply chain partners play a vital role. They can handle the intricacies of international logistics, including customs, warehousing, and shipping, making the entire process more manageable for U.S. manufacturers who may not be familiar with the region’s regulations. Additionally, these partners often have systems in place for just-in-time (JIT) deliveries, which can help manufacturers maintain inventory flow and minimize delays.

Beyond logistics, strategic supply chain partners assist with workforce training, production oversight, and intellectual property (IP) protections. With boots on the ground, they can work closely with local suppliers to ensure production standards are met and address any quality issues promptly. They can also help secure IP protections, setting up clear agreements to prevent misuse of proprietary information—a concern that often deters companies from entering new regions independently.

The message is clear: relying on Mexico as a workaround for sourcing from China is no longer a sustainable strategy. Manufacturers must consider alternative supply chain solutions to ensure resilience in this increasingly complex trade landscape.

Mexico’s Drive to Curb Chinese Imports

Mexico’s new government, led by President Claudia Sheinbaum, is actively prioritizing the reduction of the country’s dependence on Chinese imports, particularly in industries such as automotive, aerospace, and electronics. As The Wall Street Journal reported in October 2024, the Mexican government is encouraging U.S. manufacturers operating in Mexico to find alternatives to Chinese components. The aim is to strengthen domestic supply chains, but this shift poses significant challenges for U.S. companies that have relied on Mexico as a nearshoring hub while still sourcing parts from China.

For example, many high-tech components, such as those used in semiconductors and electric vehicles, are currently sourced from China. Substituting these with locally produced parts is easier said than done. Mexico’s infrastructure is not yet equipped to handle the production of these sophisticated components at scale. The WSJ article highlighted concerns from industry insiders who pointed out that Mexico’s basic infrastructure—such as reliable electricity and water supplies—lags behind what is needed for a full-scale shift in production.

Moreover, even if Mexico could ramp up production, it would take years to develop the local expertise and supply chains needed to replace Chinese imports, leaving U.S. companies facing potential delays, rising costs, and uncertainty. As one executive cited in the article mentioned, “On paper, import substitution sounds great. But execution is a big question mark.”

Increased Scrutiny on Circumventing U.S. Tariffs

While Mexico is working to reduce its dependence on Chinese imports, the U.S. is simultaneously ramping up efforts to close loopholes that allow Chinese goods to enter the U.S. through Mexico. In July 2024, the Biden administration imposed new tariffs on Mexican imports that contain Chinese steel and aluminum, according to another Wall Street Journal report. This move reflects a broader campaign to prevent China from using Mexico as a back door to avoid U.S. tariffs on its goods.

For U.S. companies that have been using nearshoring as a strategy to bypass the tariffs on Chinese goods, this scrutiny creates a new layer of risk. The tariffs, which add 25% on steel and 10% on aluminum, are aimed specifically at products that don’t meet the “melted and poured” requirement in the U.S., Mexico, or Canada. The increased oversight means that companies importing from Mexico now need to ensure full transparency on the origins of their materials.

This development could lead to significant compliance costs and potential penalties for companies that fail to meet these requirements. As one executive mentioned in the WSJ article, the increased imports of Chinese-origin steel have already caused price pressures and plant closures in the U.S. manufacturing sector. The Biden administration’s tariffs are designed to curb this trend, but for U.S. companies relying on Chinese inputs via Mexico, it adds another layer of complexity to supply chain management.

Manufacturing’s Strengths as a “Happy Industry”

A recent survey evaluating employee satisfaction across 200 companies, published by Glassdoor, ranked manufacturing third in terms of overall employee happiness. Factors like diversity and inclusion, work-life balance, and competitive compensation contributed to the sector’s strong performance. Manufacturing earned the highest score of any industry in diversity and inclusion, with a score of 77.9 out of 100. In addition, entry-level manufacturing jobs tend to offer higher pay than similar roles in other sectors, and employees often benefit from robust job security and career advancement opportunities.

But despite these strengths, manufacturers are finding it increasingly difficult to attract Gen Z workers. According to research by McKinsey & Company, only 7% of the current manufacturing workforce is made up of Gen Z workers, a number that has actually decreased in recent years.

The Challenge of Attracting Gen Z Workers

McKinsey’s research highlights that Gen Z’s workplace priorities differ significantly from older generations like Boomers (born 1946–1964) and Gen X (born 1965–1980). While Boomers and Gen X workers tend to prioritize salary, Gen Z places greater emphasis on factors such as workplace flexibility, meaningful work, and opportunities for career development. For this generation, compensation ranks lower in importance, with career advancement and supportive work cultures playing a far more significant role in their job satisfaction.

The research also indicates that nearly 48% of Gen Z workers in manufacturing plan to leave their jobs within six months. This high turnover rate suggests that traditional incentives like pay raises are not enough. Gen Z workers want environments where they feel respected, can learn new skills, and can contribute meaningfully—factors that are not always prioritized in traditional manufacturing settings.

Effective Strategies for Retaining Gen Z Talent

To better align with Gen Z’s priorities and effectively attract and retain this generation, manufacturers need to adopt strategies based on McKinsey’s findings. Here are three key approaches that can help:

1. Reimagining Work Structures: Flexibility is crucial for Gen Z workers. McKinsey’s research reveals that rigid schedules, such as 12-hour shifts commonly found in manufacturing, often discourage younger workers. Companies that introduce more flexible work schedules, whether through shorter shifts or options for part-time work, will find it easier to attract Gen Z talent.
2. Fostering Career Growth and Meaningful Work: According to McKinsey, career development is a top priority for Gen Z. They want to see a clear path for advancement and feel that their work contributes to something greater. Manufacturers can address this by providing well-defined career pathways, continuous skill development opportunities, and roles that allow workers to take ownership of projects.
3. Building Supportive Leadership and Mentorship: McKinsey’s findings highlight the importance of leadership that fosters respect, psychological safety, and professional development. Gen Z values leaders who can mentor them, help them grow, and create environments where they feel their contributions matter. Manufacturers can improve retention by investing in leadership training for supervisors, focusing on developing supportive, mentorship-based relationships with younger workers.