The debate about how much American reshoring affects the state of U.S. manufacturing continues. Several reports in late 2014 touted a renaissance for manufacturers as jobs continued to come back to American soil, even though those numbers indicated that only a small percentage of job growth came from these firms.
Research company CMD found a 10.5 percent increase of construction in 2015 thanks to a 7.8 percent increase in industrial construction. These figures compare to an increase of 5.9 percent in overall new construction from 2013 to 2014. American reshoring construction projects helped offset a lower residential construction market in 2014. By comparison, industrial starts rose 16.5 percent in 2014, a number more than double the projected 2015 figure.
The report touts falling energy prices, declining competitive advantages in China and lower inflation as reasons American reshoring trends continue. Sustainable wage growth, expanding manufacturing markets and increased business spending also show companies are willing to invest in American workers.
New industrial construction means more jobs for skilled laborers and increased spending on construction materials. American reshoring also benefits long-term workers seeking higher-paying manufacturing jobs. Advanced skills, and jobs that require more education, start with people who have good computer skills and design knowledge. Although seemingly small, the reshoring trend benefits more than just the manufacturing industry. Education, technology and construction get boosts as well.
Experts argue the validity of claims that reshoring can save the manufacturing industry in the United States. Jonathan Webb, CEO of Procurement Leaders, believes more manufacturing jobs continue to go overseas instead of returning to the United States. Big-name companies such as Walmart, Stanley Black & Decker and Lenovo made headlines when they promised more jobs for American workers by building plants on American soil. These large companies buck continued offshoring trends.
Stanley Black & Decker CEO John Lundgren claims the cost difference between Chinese goods and American goods has shrunk to the level of "parity." Instead of "made in America," consumers seem to be happy with "made in American with foreign components." Lundgren says American manufacturers can shorten the time from the design phase to a finished product. That means companies turn a profit more quickly in the United States than overseas due to decreased shipping times, better quality control and product testing.
Large companies, with much bigger revenues and profits, can afford to start huge projects in the United States. Small startups, in efforts to keep initial costs down, may have no choice but to import finished goods from overseas. Jobs created due to American reshoring amounted to 50,000 from 2010 to 2013, compared to 800,000 manufacturing jobs created in the United States from 2010 to 2014. These numbers both seem small when analysts note the 6 million manufacturing jobs lost between 2000 and 2009.
Some experts call American reshoring a trend, while others are more cautious. High-profile companies returning to America cannot be ignored as industry leaders. As American consumers continue to spend money on goods made in America, reshoring may continue if the trend proves to be profitable among companies that move back home.
Photo courtesy of kai4107 at FreeDigitalPhotos.net
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