How PoE Manufacturing Facilitates Reshoring

Manufacturers continue to struggle with supply chain disruptions that began in 2020. As suppliers shut down their operations in response to the global health emergency, companies found it more challenging to find raw materials and components. If they could locate an alternative supply, the costs would typically be much higher, and lead times much longer. Profit margins declined, even as companies passed price increases to the consumer. Let’s see how PoE manufacturing technology can help.

Long before the global pandemic, US manufacturers relocated operations to areas with cheap labor to remain competitive and maintain the profit margins investors expected. Moving facilities closer to raw material sources helped counter rising shipping costs that ate away profits. Manufacturers could reduce labor costs by relocating operations outside the US, allowing them to remain competitive. This business model worked well until 2020, when businesses could no longer deliver products because of supply chain disruptions. 

As a result, manufacturers are looking for ways to return operations to the US for a more stable supply chain. However, businesses pursuing this strategy must mitigate the labor and shipping costs associated with manufacturing in America to ensure a competitive advantage. Companies looking to reshore their manufacturing capabilities should consider investing in an infrastructure that leverages PoE manufacturing technology and automation to lower labor costs. Leveraging artificial intelligence and the Internet of Things (IoT) allows manufacturing to improve profitability.

Reshoring Strategies

Reshoring strategies weigh the risks of keeping manufacturing facilities offshore against the cost of updating US plants for increased production. These strategies examine shipping and labor costs and operational improvements to determine an acceptable return on investment.

Shipping Costs

In 2019, shipping a 40-foot container from China to California cost, on average, between $1,500 and $3,000. Today, the same container can cost between $3,000 and $4,000. Higher energy costs and port delays only add to shipping expenses. Geopolitical port closures can force ships to find new ports that increase transport charges. Potential tariff wars may further incentivize reshoring efforts. Manufacturers must calculate the cost of importing raw materials, components, or assemblies if unavailable in the US.

Labor Costs

According to the US Bureau of Labor Statistics, hourly compensation in the manufacturing sector increased by 4% in 2024, while unit labor costs increased by 3.3%. Nonunion workers averaged just over 3%, while union workers averaged 5%. These percentages reflect an upward trend beginning in the third quarter of 2020. As of February, the average hourly pay for production and non-supervisory positions in the manufacturing sector was $28.64.

Other Considerations

Although shipping and labor costs are the primary drivers for companies looking to reshore, manufacturers should employ a more holistic approach to whether returning manufacturing to the US makes sense. This approach should examine labor, productivity, geopolitical risks, customer base, logistics, and technology. Specifically, companies should conduct a cost-benefit analysis to determine how automation, robotics, data analytics, and artificial intelligence can offset labor and operational costs.

Reshoring Technologies

Reshoring technology includes many of the same advanced technologies companies already use to digitize operations for greater flexibility and resilience. These technologies include: 

• Data Analytics: Companies need data to understand their market, customers, and operations. They’ll also need quality data to feed their AI applications.
• Artificial Intelligence (AI): AI consumes data from multiple endpoints to address operational concerns in real-time, such as shutting down overheated equipment to minimize damage.
• Internet of Things (IoT): There are all manner of IoT devices on the market, but one example might include temperature sensors sending data to AI applications for monitoring. The application can then use that data to adjust temperatures on the factory floor to ensure optimum operating conditions.
• Automation: Automating repetitive tasks eliminates time-consuming activities that can increase labor costs. Transferring data from one machine to another electronically is faster and reduces errors.
• Robotics: Robots (and cobots) make manufacturing more efficient and safer. Robots can lift heavy objects and manage toxic materials more safely than humans, and onboard sensors can detect unsafe levels of particulates if an accident occurs.
• Cloud Services: Moving to the cloud allows manufacturers to leverage their data stores using AI applications to improve their digital operations continuously.

Incorporating advanced technologies reduces labor costs and minimizes the impact of labor shortages on operations. Automation can expedite shipping and receiving, and robotics can help load and unload inventory. However, manufacturing facilities also require an infrastructure that can rapidly transfer power and data across a factory floor before they can justify reshoring.

What is PoE Manufacturing?

Using power over Ethernet (PoE) technology, manufacturers can create a resilient infrastructure that supports advanced technologies cost-effectively. This technology can bridge the gap between legacy and modern devices to reduce reshoring’s upgrade and maintenance costs.

What is PoE?

PoE technology sends power and data to PoE-enabled devices through a single Ethernet cable. This technology eliminates the need for external power sources, simplifying deployment. Electricians are unnecessary, as network technicians can run Ethernet cables to connect devices.

The latest PoE standard provides up to 90 watts of power to PoE devices and sends gigabits of data across a network. PoE standards are backward compatible, allowing old and new devices to co-exist on the same network. Connecting PoE power sources to an uninterruptible power supply (UPS) further ensures continuous operation, even during power outages.

Saving Power with PoE 

PoE-enabled switches provide power to PoE-capable devices. For example, the Versa C60-00F-01 managed switch has 28 ports with 24 RJ 45 connectors and four SPF+ ports for hot-swappable storage devices. This switch controls the power sent to each device based on its power requirements and disconnects when it is no longer in use. These management features optimize power usage, reducing energy costs.

Supporting Data-Hungry Applications

Deploying advanced technologies as part of reshoring requires network connections that support gigabits of data. Slow transfer rates create roadblocks to efficient operations. PoE 802.3bt standard supports up to 10 gigabits of data, and with broader bandwidth, PoE switches can move information across the network at rates that meet the needs of AI applications. 

Managing Network Devices

The built-in management features of the C60 switch collect data from connected devices and display the analyzed data on a dashboard for quick reference. These capabilities lower labor costs by automating data collection and organizing data for faster decision-making.

Versa Technology provides PoE manufacturing technology solutions to facilitate the reshoring of operations. They offer high PoE solutions for powering wireless access points, access control systems, and security cameras—contact Versa Technology to learn more about reshoring with PoE technologies.