Reshoring Debate Continues

Much news has been made about reshoring trends in the manufacturing industry since the economic recession of 2007 and 2008. During that economic rough patch, protecting American economic interests from overseas interests became one way to stimulate the economy when lawmakers considered offering government incentives to reshore domestic manufacturing jobs.

Reshoring trends have thrived throughout Europe, the United Kingdom and the United States even without subsidies. As many as one in six British manufacturers returned from overseas between 2011 and 2014. In the United States, the trend is less pronounced and has had less of an economic impact than previously thought. The United States has many more manufacturing companies, in total, than the United Kingdom, yet only 64 companies returned to American soil in 2011, and only around 300 were projected to reshore through 2015.

While these numbers are a good start for American workers, domestic manufacturing jobs are expected to take decades to return even if these reshoring trends continue apace. Electronics, transportation and high-end apparel companies represented the largest numbers of reshored companies during this period, and the factors driving relocation are thought to be lower energy costs due to the shale boom in America and rising wages in China.

Reshoring trends are good news for American workers, but companies face a dilemma when considering the move back. After 60 years of offshoring, and the job losses that go with it, laborers in the United States may have lost many of the skills needed to compete with foreign labor pools. Automation technology presents another dilemma. Vastly increased use of automated manufacturing processes in factories means more employees must be educated engineers, rather than low- or semi-skilled laborers.

Asian companies, especially those in China, enthusiastically take on new technology to make goods faster and cheaper just as American companies do. This makes competition fiercer than ever before. Though it took decades for American companies to go overseas, these factors may determine whether it takes a similar length of time for them to return.

Reshoring trends may continue for decades, but not as quickly as American workers want. Approximately 50,000 jobs were added to the American work force due to reshoring of manufacturers from 2010 to 2013. Although this number is better than nothing, it pales in comparison to the 6 million manufacturing jobs that were lost from 2000 to 2009. For reshoring to happen on a large scale across the economy, manufacturing companies have to rethink entire business models rather than invest in old-fashioned factories filled with thousands of workers.

The return of American manufacturing to the is expected to take time, but the changing landscape means the regrowth of domestic industries is more about technology than it is about hiring millions of laborers. Reshoring trends continue to be positive for the American economy. However, manufacturing will not be the same in America in the 21st century as it was when companies left for other countries in the 1980s and 1990s.

Photo courtesy of Steve Jurvetson at Flickr.com