The debate about U.S. manufacturers returning to America with higher-paying jobs continues to swing between anecdotes versus statistics. Reshoring initiatives gained steam in 2014, but the numbers still fall short of the overall amount of manufacturing jobs lost between 2000 and 2009.
A report published May 1 indicates a record number of U.S. manufacturing jobs returned to America, either through reshoring initiatives or foreign direct investments in the United States. Up to 60,000 manufacturing jobs were added in America in 2014, versus 12,000 in 2003. Contrarily, 50,000 jobs were offshored in 2014, versus 150,000 in 2003. The net gain for manufacturing jobs was 10,000 in 2014.
The significance of the statistics revolves around the net gain. For the first time in 20 years, America gained more manufacturing jobs than it lost. U.S. manufacturers returned to the United States, in large part because of higher labor costs in China. Other factors include lower shipping costs, faster shipping times and quicker reactions to consumer shopping trends.
Instability in overseas markets have led many firms to reconsider moving operations to other countries. A garment factory's collapse in Bangladesh in 2013, coupled with port closures in the western United States in 2014, made companies rethink moving jobs to other countries. The United States government offered U.S. manufacturers incentives to remain in America as opposed to going elsewhere.
Wal-Mart agreed to buy more American-made products from 2013 to 2023 to the tune of $250 billion. GE began producing energy-efficient light bulbs in the United States, and Wal-Mart carries those products exclusively. Boston Consulting Group believes Wal-Mart's move alone could create 1 million new jobs in the United States.
GE says appliances made in the United States make it to stores faster. It takes approximately three hours to produce a refrigerator, yet it could take days for models to reach American ports due to shipping times. Domestic production means refrigerators could hit stores less than 24 hours after leaving the plant.
Fashion companies in Los Angeles and New York began to feature U.S. manufacturers of clothing. Websites such as Etsy continue to give smaller-name labels a chance to sell their wares and compete with larger clothing manufacturers. More and more clothing stores have "Made in the USA" sections and labels.
Despite the good news, the reshoring debate is far from over. As many as 6 million manufacturing jobs left American soil between 2000 and 2009, and just 1 percent of those jobs returned in 2014. U.S. manufacturers may return to America, but the pace may slow due to the time it takes to set up a company because of logistics, infrastructure, building construction and staffing needs.
After 20 to 30 years, U.S. manufacturers may return operations to America because the value of the American workforce is greater than that of Asian laborers. Governments, private companies and interest groups should continue this momentum as reshoring represents a boom to the American economy.
Photo courtesy of Stuart Miles at FreeDigitalPhotos.net
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