What’s Driving Silicon Valley’s Manufacturing Renaissance?
“Re-shoring,” “on shoring,” “right shoring” – call it what you want.
If you think you’re hearing more about local manufacturing, it’s not
your imagination. It is a real phenomenon that more and more companies
are keeping their production operations in the United States, or even
moving them back from abroad. And Silicon Valley is ground zero for this
We are witnessing this first-hand in Fremont, hearing
regularly from tech companies who are re-shoring processes from
overseas. And we’re not talking about your grandmother’s manufacturing –
but rather advanced manufacturing processes that create semiconductor
components, medical diagnostic tools and, of course, the Tesla Model S.
In fact, Fremont is arguably one of the most manufacturing-intensive
Silicon Valley cities and was even recently recognized by the Associated Press as a “manufacturing hub.”
So what’s driving this revival? We’ve talked to many experts, and here are some of the top reasons we’ve heard.
1. Increased Quality Control & Tapping into Innovation–
Companies with local manufacturing have greater control over the
production process, including quality and faster turnaround. What’s
more, Silicon Valley’s strength in high tech manufacturing means that
companies can take advantage of access to Valley engineering talent to
make products that are evolving more quickly than an overseas strategy
2. A Level Playing Field–
While low wages in Asia were originally an attractive incentive for
U.S. offshoring, upward pressure on those wages has led companies to
reconsider this conventional wisdom, which is further challenged by the
need for IP protection.
3. The Cluster Effect –
Many manufacturers are also finding they need to be closely integrated
with both their customers and suppliers. Because a reliable supply chain
is increasingly important, government agencies, from the State to the
local level, are taking note and implementing policies and programs to
help support this manufacturing cluster.
To emphasize the last point, Fremont has partnered with other Silicon Valley cities to form the Silicon Valley Manufacturing Roundtable,
a network of industry, government, education and workforce
representatives focused on growing the Valley’s manufacturing base. The
end goal? Making “on-shoring” the norm instead of a trend.