The loss of American manufacturing jobs to foreign labor has been a central theme of several presidential candidates’ campaigns. However, the trend of offshoring may be slowing, according to one organization.
According to non-profit advocacy group the Reshoring Initiative, offshoring resulted in a net loss of approximately 220,000 manufacturing jobs from 2000 to 2003. However, according to the group, the country added roughly as many jobs due to foreign investment and reshoring as it lost to offshoring last year. Some of the largest U.S.-based companies, likely for both public relations and practical reasons, have begun building factories domestically for operations that would likely have gone overseas a few years ago.
Offshoring, or shifting production from U.S. plants to foreign facilities, is a relatively recent phenomenon that has taken a considerable toll on the U.S. economy. In an interview with 24/7 Wall st., Harry Moser, founder and president of the Reshoring Initiative, explained that recent developments have made the prospect of manufacturing domestically much more feasible. Moser cited economic troubles and rising wages in China as one of the primary drivers of this recent trend.
Indeed, lower labor costs and fewer regulations in countries such as China have created an incentive for U.S. companies to relocate production there. Consequently, U.S. manufacturing has taken a major hit. A study by the Economic Policy Institute found that the U.S. lost roughly 2.4 million manufacturing jobs to China alone from 2001 to 2013.
However, the same market forces that have pushed American jobs overseas are now bringing some of those jobs back. Recently, labor costs in places such as China have been rising, and when paired with high international shipping costs, offshore production presents less of a discount than it once did. Recently, General Electric shifted production of a water heater from China to a plant in Louisville, Kentucky. The move brought hundreds of manufacturing and engineering jobs back to the U.S.
While the reshoring phenomenon is primarily a byproduct of expensive labor abroad and high shipping costs, bringing manufacturing jobs back to the United States is often beneficial to a company’s image. For example, Walmart contracted General Electric to manufacture high efficiency light bulbs in its plants in Ohio and Illinois as a part of Walmart’s brand-boosting Made in USA initiative. Similarly, Farouk Systems, Inc. cites image as a primary reason for reshoring jobs. Along with Walmart and General Electric, Farouk Systems ranks among the companies bringing the most jobs back from overseas.
A variety of other logistical factors are also making reshoring more practical for businesses. In the era of Amazon, in which consumers expect quick turnaround on products, it can be more practical for companies to manufacture products in-country to have the product ready for customers faster and avoid shipping expenses.
Moser further explained that reshoring can often improve the quality of the manufacturing product. “Many have done it because of the consumer preference for made in America products.” Moser added.
The extent to which these factory openings are truly a sign of an American manufacturing renaissance or merely a pause from the ongoing departure of the industry from U.S. shores is still unclear. One certainty is that it will take more than a few thousand jobs to reverse the trend of decades of offshoring and heavy reliance on foreign imports.
The roughly 22,000 jobs these companies have brought back to the country over the last five years is not insignificant, but it is a drop in the bucket compared to those they have sent abroad. According to one EPI estimate, Walmart alone was directly responsible for the loss of 200,000 American manufacturing jobs due to it’s Chinese offshoring.
It is perhaps much easier to make the argument that the service sector is experiencing a true revival. While several years ago it was common practice for American companies to offshore customer support call center jobs, many American companies and customer service contractors are adding or plan to add jobs in the U.S. As of last year, there were roughly five million Americans employed in some 66,000 call centers across the country.
The Reshoring Initiative provided 24/7 Wall St. with estimates for the U.S. based companies that have reshored the most manufacturing jobs in the past five years. These reshoring estimates are based on company announcements to move international manufacturing operations to the U.S.
These are the manufacturers bringing the most jobs back to America.