The Top 5 States Benefiting from Reshoring

Sarah Edwards July 25, 2023

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According to Xometry’s latest American Manufacturing Resurgence Poll, 48% of CEOs have reshored some or all of their operations, representing a huge jump from last quarter’s figure of 35%.

Conducted in partnership with Zogby Strategies and Forbes, this quarterly poll tracks decision-makers and C-suite sentiment at over 150 leading U.S. organizations, making it an excellent tool for gaining insight into the strategies of the nation’s leading businesses.

Reshoring, the process of bringing manufacturing operations back to the nation where a company is based, has gained significant traction in recent years. Pandemic-related supply chain disruptions revealed some significant vulnerabilities in American manufacturing strategies, defects that policy-makers and business leaders aim to remedy through reshoring.

Ongoing conflicts, such as Russia’s invasion of Ukraine and instability across Asia and Europe, have spurred CEOs to double down on reshoring efforts and bring their operations back stateside.

While these efforts have benefited the U.S. job market as a whole, several states have become reshoring hotspots. Below are the five states benefiting the most from reshoring and why industries are choosing these locations.

The 5 States Benefiting Most from Reshoring Trends

When composing a list of the five states benefiting most from recent reshoring trends, we leveraged data from the Reshoring Initiative’s annual report.

The Reshoring Initiative is a nonprofit organization committed to “bringing manufacturing back home.” In its annual report, the Reshoring Initiative utilized data on reshoring, nearshoring, and foreign direct investments (FDIs) in American manufacturing.

As part of this report, researchers disclosed how many jobs were added to each of the top 20 states in 2022 and how many companies were projected to establish or reestablish manufacturing operations in these jurisdictions. This overview features the top five reshoring destinations in 2022.

1. Kentucky

Last year, Kentucky added approximately 45,900 new manufacturing jobs as a result of reshoring efforts. In total, 44 businesses chose to reshore in the Bluegrass State.

What Industries Are Moving to Kentucky?

According to the Reshoring Initiative report, Kentucky propelled into the 2022 rankings’ top spot thanks to huge investments from electric vehicle (EV) manufacturing companies.

Why Are Manufacturers Moving to Kentucky?

Kentucky has business-friendly tax laws and, according to CNBC’s cost of doing business calculations, ranks as the number one place to do business in the nation. Additionally, Kentucky is located in the midst of a major distribution hub, making it easy for manufacturers to ship their goods to downstream links in the supply chain.

2. North Carolina

In 2022, an estimated 106 companies reshored their operations to the Tar Heel state. In total, North Carolina added approximately 43,881 new jobs as a result of nearshoring, falling just behind Kentucky.

What Industries Are Moving to North Carolina?

Like Kentucky, North Carolina benefitted from major EV battery investments.

Why Are Manufacturers Moving to North Carolina?

EV battery manufacturers, and other businesses, are likely choosing North Carolina due to its favorable corporate income tax rates and accommodating regulatory requirements. According to the NC Department of Commerce, the state has the lowest corporate income tax rates in the nation.

3. Georgia

In 2022, 51 businesses reshored their operations to Georgia. This resulted in the creation of over 32,000 new jobs in the Peach State.

What Industries Are Moving to Georgia?

Georgia also rode the EV battery wave into a top three spot on the Reshoring Initiatives annual report. Semiconductor manufacturers like Micron Technology Inc. and multinational liner shipping company Hapag-Lloyd also join the fold.

Why Are Manufacturers Moving to Georgia?

Georgia ranked fourth in CNBC’s 2023 Top States for Business report. The state ranked number one in infrastructure, indicating that it has the resources to help businesses relocate efficiently.

4. Ohio

In total, reshoring created 23,904 new jobs for Ohioans. An estimated 76 manufacturers now call the Buckeye State home.

What Industries Are Moving to Ohio?

Various businesses are making their way back to Ohio, including electrical equipment and components manufacturers and chemical production firms.

Why Are Manufacturers Moving to Ohio?

In the CNBC report, Ohio placed outside of the top 10, coming in at number 12. However, it did rank fourth in cost of doing business and sixth in infrastructure, which makes it an appealing destination for reshoring businesses.

5. Alabama

Alabama rounds out the top five, with 53 businesses reshoring their operations there last year. In total, these companies added approximately 17,000 jobs, which had a major impact on the economy of the Cotton State.

What Industries Are Moving to Alabama?

Automotive manufacturers like Hyundai and Honda are investing heavily in Alabama-based manufacturing operations. Appliance, electrical component, and chemical manufacturers are also reshoring some of their operations to Alabama.

Why Are Manufacturers Moving to Alabama?

Alabama features a supportive business climate, reasonable corporate tax rates, and it is located in the heart of the southeast.

Honorable Mention: Texas

In 2021, Texas held the top spot in the Reshoring Initiative’s annual list. In 2022, it fell to the 13th spot, as the Lone Star State only gained 10,643 reshoring-related jobs. However, 87 companies relocated to Texas, which has been a perennial hotspot for reshoring.

What Industries Are Moving Here to Texas?

A variety of industries are relocating or have already reshored to Texas. A few examples include Caterpillar, Oracle, and Tesla. As a result of all this growth, Texas now has the ninth-largest economy in the world (if Texas were a nation).

Why Are Manufacturers Moving to Texas?

Due to various economic and logistical factors, Texas is a top-rated destination for businesses. It has multiple seaports, hundreds of miles of coastline, and no corporate or personal income tax.

Looking to the Future: Will Reshoring Continue at this Historic Pace?

The rate of reshoring has been accelerating at an unprecedented pace over the last few years. The ongoing Russia-Ukraine war, rising tensions with common offshoring partners like China, and many other geopolitical factors will further fuel nearshoring and reshoring efforts.

Organizations that want to prioritize supply chain agility and promote business continuity should explore nearshoring or reshoring opportunities and begin to identify the most favorable destinations for their operations. By doing so, they can form more resilient and nimble supply networks, critical in the current economic and geopolitical climate.