Viewpoints: Round Two for Reshoring: Meeting the Challenge

Viewpoints: Round Two for Reshoring: Meeting the Challenge

Feb 6, 2015

By Harry Moser, Reshoring Initiative, Manufacturing Engineering

About 170,000 manufacturing jobs have been brought to the US from offshore in the last five years, according to our calculations. That job gain is the result of both new reshoring—the return of manufacturing work that was previously produced offshore—plus Foreign Direct Investment (FDI) in our manufacturing sector. It also represents about 25% of the total increase in US manufacturing jobs since the recent low of 11.3 million in February 2010. About 12.2 million Americans are now employed in the manufacturing sector. In fact, our research shows that more manufacturing work is now coming here than leaving. 

Now, the challenge is on to bring back another 3-4 million manufacturing jobs that are still offshore.

Meeting this challenge requires a continuation of the positive cost trends that are already bringing work back home, such as rising offshore costs and lower energy costs at home. But we must also improve US competitiveness, especially our skilled workforce, and change how companies make sourcing decisions in the first place. We need to ensure that they consider all of the costs when making these critical decisions.

The top industries reshoring, by number of jobs, have been transportation equipment, electrical equipment, computer products, fabricated metal products and wood products. The most commonly cited reasons for reshoring are lead time, quality, automation/productivity, rising wages, currency variation, skilled workforce and government incentives. Sixty percent of reshoring is coming from China, where wages have been rising at 10%-15% a year. The Midwest and Southeast are the strongest regions for reshoring, with South Carolina and Michigan leading the pack.

Other factors are helping, too. Wal-Mart’s commitment to source an additional $250 billion in US products through 2022 is having a large impact. We estimate this program could contribute to the addition of 300,000 US manufacturing jobs. The US shale gas and oil boom is also playing a key role. The American Chemistry Council has identified more than $136 billion in announced capital expenditures. Much of this investment will be made in equipment manufactured in the US, close to the site of the production.

The Reshoring Initiative also provides a broad range of free resources to bring back more manufacturing, including:

  • Total Cost of Ownership Estimator—A free online tool to help OEMs evaluate sourcing alternatives and suppliers.
  • Reshoring Library—Contains 1800+ linked articles on reshoring. See what your competitors are reshoring. Learn from them. See what companies in your customers’ industries are reshoring. Sell to them.
  • Case Studies—Submit your own reshoring case for free publicity and to make reshoring more visible. Receive a free “Manufacturing is Cool” T-shirt.
  • Economic Development Program—Strengthen your region by replacing imports with local production, ideally yours. Have your local economic developers contact us.

By reducing our trade deficit, reshoring has the potential to increase US manufacturing by 25%, curtail unemployment and the budget deficit, improve income equality, strengthen our defense industry and motivate skilled workforce recruitment. Achieving this potential requires your help at your company and in your community!

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