The Reshoring Initiative is reporting that, for the first time in decades, more manufacturing jobs are returning to the United States than are going offshore.
According to a recent press release promoting the Reshoring Initiative’s 2016 Reshoring Report, the combined reshoring and foreign direct investment (FDI) trends grew by over 10 percent in 2016, adding 77,000 jobs and exceeding the rate of offshoring by about 27,000 jobs. “The 2016 results bring the total number of manufacturing jobs brought back from offshore to more than 338,000 since the manufacturing employment low of February 2010,” said the release, adding that there are still “huge opportunities and challenges to bringing back all the 3 to 4 million manufacturing jobs cumulatively lost to offshoring.”
Secretly, I’ve always wondered if these kinds of stats were a little overhyped – playing into our desires to latch on to a feel-good story with a positive trajectory. But when the Reshoring Initiative takes a deeper dive into the “whys” of reshoring, they make a pretty compelling case that is clearly resonating. Some of the reasons they cite for the ramp-up include things like proximity to customers, government incentives, skilled workforce availability and “ecosystem synergies,” which I take to mean that intangible of culture that drives so many successful businesses.
Transportation equipment remained the strongest industry, accounting for nearly 40 percent of total jobs returned, and plastics/rubber and furniture saw the largest increases in industry ranking.
Preliminary 2017 data trends are looking to be at least as good as 2016, but it certainly begs the question as to how we can sustain this activity over time. The Reshoring Initiative believes that government plays a big role, but also, in a recent e-newsletter, has pointed to an unlikely champion: automation.
For years, automation has been carrying the blame, rightfully or not, for the outflow of jobs from the manufacturing sector. But the Reshoring Initiative takes a different tact, going so far as to say that automation is actually key to job growth in the U.S. Here’s why: The U.S. isn’t the only country in the world with automation in its crosshairs, and the Reshoring Initiative argues that if countries like China are investing heavily in these technologies, we either automate or lose more jobs to offshoring. “Despite the fact that automation will continue to eliminate some low- and mid-skill jobs,” the report goes on to say, “it decreases cost and restores competitive advantage, making more reshoring possible. More reshoring and less offshoring means more manufacturing jobs.”
Other fodder for this argument is that automation actually helps developed countries more than developing countries because it reduces the labor hours required to produce goods. This shifts the mix toward higher skilled workers. As if we couldn’t find any more reasons to continue to ramp up focus on manufacturing skill development.
In the end, Reshoring Initiative urges companies to focus on creating flexible, sustainable business models, making decisions and selling based on total cost analysis and on using automation to close remaining total cost gaps.
For more information on the Reshoring Initiative, please visit www.reshorenow.org.
This article first appeared in IEN’s June, 2017 print issue. Click here to subscribe.
