The trend of nearshoring, in which companies in developed markets like the U.S. and western Europe move production facilities closer to their main bases of consumption, continues. Many of the labor-cost advantages that initially spurred companies to move their manufacturing offshore have eroded—most notably in China—and yet, as companies move manufacturing capacity, some executives realize that local labor markets may not be sufficiently deep to meet rising demand or growing numbers of prospects in available talent pools may not pass drug testing requirements.


Alix Partners’ 2016 annual survey of manufacturing and distribution companies serving North America and western Europe found that 69 percent of the respondents said they consider nearshoring a possible opportunity to meet U.S. and European demand—up from just 40 percent in the previous year’s analysis. In addition, more than two-thirds of the respondents said their company has nearshored in the past three years or plans to do so. The survey included responses from senior supply chain, logistics, and manufacturing executives across a range of industries, including automotive, consumer products, and aerospace and defense.


As the companies surveyed relocate production, some face mounting labor challenges— especially when it comes to finding people to fill key manufacturing roles, such as process or product engineers, experienced line operators and experienced front-line supervisors. Those shortages may, ultimately, lead to higher-than-expected labor costs, reliance on contractors or temporary labor, and other ramifications that could make nearshoring less attractive for labor-intensive manufacturers. In the meantime, to address shortages in skilled labor, more than 60 percent of the respondents said their company is building relationships with local education providers, 55 percent said their organization is increasing wages to attract additional candidates, and 53 percent of the respondents said their company has an internal apprenticeship program in place.


There is another labor challenge to consider, which, frankly, is shocking: The number of prospective hires who flunk a drug test before hiring is on the rise. Calvina L. Fay, executive director of the Drug Free America Foundation, said in a recent CNN article that some employers are increasingly frustrated because they have trouble hiring drug-free workers while other executives are especially concerned about increasing drug-testing failure rates of employees in “safety sensitive” workplaces, where an accident by an employee under the influence of drugs could cost lives.


Indeed, a report released last fall by Quest Diagnostics shows that following years of declines, the percentage of employees in the combined U.S. workforce testing positive for drugs has steadily increased over the last three years to a 10-year high—according to an analysis of nearly 11 million workforce drug test results. The Quest Diagnostics Drug Testing Index™ examines illicit drug use by America’s workforce based on an analysis of de-identified results of more than 9.5 million urine, 900,000 oral fluid and 200,000 hair laboratory-based tests performed nationally by the company for employers in 2015.


Insights from the 2015 data show that in the general U.S. workforce, the rate of amphetamine, marijuana and heroin detection increased annually for the past five years, as detected in urine testing. The study found that since 2011, amphetamine positivity increased 44 percent, marijuana positivity increased 26 percent and heroin positivity increased 146 percent. The Oxycodone positivity rate has declined annually since 2011, confirming previous research showing that opioid prescriptions have declined in 49 states since 2012.


“Our nationally representative analysis clearly shows that drug use by the American workforce is on the rise, and this trend extends to several different classes of drugs and categories of drug tests,” says Barry Sample, Ph.D., senior director, science and technology, Quest Diagnostics Employer Solutions. “The 2015 findings related to post-accident testing results should also be of concern to employers, especially those with safety-sensitive employees.”


What are your thoughts on prospective new hires failing pre-hiring drug tests? Is that a challenge for your company?