Why Reshoring Manufacturing To America Is Growing
The U.S. has lost millions of domestic manufacturing jobs over the past decade, thanks to outsourcing to foreign countries. But in a recent reverse trend, we’re starting to see a small yet growing number of American companies reshoring manufacturing jobs back to the United States.
USA Today cites that some 265,000 jobs have been re-shored in the past five years from cheap labor countries like China and India. New technology is making that reshoring possible. AMF’s newest tube laser technology is driving jobs back to the US because of the incredible advances in speed and manufacturing productivity.
Why did U.S companies start offshoring in the first place? Cheap labor and tax advantages, along with less stringent manufacturing regulations, are the main reasons. However, the same economic forces that pushed U.S. jobs overseas—costs—are now reversing and reshoring manufacturing jobs to America.
Manufacturing was the hardest-hit industry, accounting for about half of the trade deficit and leading to job loss in every state in the U.S. According to USA Today, the U.S. lost 2.4 million manufacturing jobs to China alone between 2001 and 2013. In addition to lost jobs, U.S. wages also suffered due to the competition with cheap labor around the world. It’s estimated that the average two-income U.S. household loses roughly $2,500 per year due to wage decrease.
Rising labor and shipping costs, in addition to increased risk, are major points of stimulus behind reshoring manufacturing to America. Reshoring Initiative indicates that this is the fastest and most efficient way to strengthen the U.S. economy, and lists the top reasons for reshoring to be:
- Lead time
- Higher product quality and consistency
- Rising offshore wages
- Skilled workforce
- Freight costs
- Image of being Made in USA
- Lower inventory levels, better turns
- Better responsiveness to changing customer demands
- Minimal intellectual property and regulatory compliance risks
- Improved innovation and product differentiation
- Local tax incentives
Of the 265,000 jobs jobs have been reshored in the past five years, many of these belong to some of the largest U.S.-based companies such as G.E., Walmart, Ford, Boeing, and Farouk Systems. Bringing manufacturing jobs back stateside can also benefit a company’s image. USA Today cites Walmart’s “Made in USA” initiative as an example of a successful brand-boosting initiative.
It’s estimated 3.5 million manufacturing jobs will need to be filled in the U.S. over the next decade. According to a recent article by Harry Moser, Founder and President of the Reshoring Initiative, a higher skilled workforce is critical to a successful reshoring effort. As baby boomers retire and the rising generation sees a limit in the growth potential of manufacturing, recruiting and training skilled manufacturing talent is critical.
Creating a highly skilled workforce in the U.S. is critical to job growth in America. Reshoring manufacturing jobs to the U.S. is a key component to restoring a vibrant U.S. economy.
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