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PROPERTY & CASUALTY
FEB 14, 2018
Are More Manufacturing Jobs Returning to the U.S.?
It wasn’t very long ago that the U.S. was the largest manufacturing country in the world. That all changed, however, when China took over the title in 2010 – and it’s been there ever since. The good news is the U.S. is positioned to retake the number one spot again by the end of this decade.
Several factors are contributing to the country’s rise to the top, including labor costs, labor productivity, fuel costs, a favorable currency exchange and lower corporate tax rates. Need some proof that our country is heading in the right direction? According to Deloitte, U.S. manufacturing jobs increased by over 60,000 in 2014 – an increase of 400 percent since 2003. More tellingly, over 250,000 jobs were created or brought to the
U.S. from other countries between 2009 and 2016.
For the U.S. to maintain its momentum in the industry, it needs to stay competitive. Nowadays, the key to true competitiveness is innovation. Innovation like smart products, smart factories, advanced materials and technology, as well as the Internet of Things (IoT) are the areas manufacturing executives need to concentrate on to achieve future competitiveness. So, it’s comforting knowing that the U.S. is the largest spender on basic innovation research worldwide, spending more than $64.4B in 2013. To put this into global perspective, Japan comes in at number two, spending a mere $16B.
Innovation isn’t the only indicator of whether or not a manufacturer will prove competitive. The availability of skilled talent, containing costs and the ability to increase productivity are critical considerations for any manufacturer’s goals going forward.
Talent is also an indicator of growth, or the potential for growth. In a Gallup Poll last year, the majority of polled Americans (58 percent) stated that creating jobs is the most important solution for keeping manufacturing jobs from going overseas. This answer was more popular than the other options of “reduced government regulation/involvement” or “lower taxes.” The U.S. must be doing something right, the U.S. Bureau of Labor Statistics says there are currently more than 12.4 million Americans working in manufacturing. That’s an increase of 25,000 jobs from the prior year.
It’s time for U.S manufacturers to truly weigh the pros and cons of keeping business overseas and to consider reshoring their operations back home. The deciding factor may be simple math. Experts suggest that many companies may have only done rudimentary calculations when determining the cost difference between reshoring and offshoring, and they may want to re-evaluate that decision. Labor costs, freight, duty, delivery, inventory and other costs have probably changed since many companies last did the math. Need some help with the numbers? The Reshoring Initiative has an online
Total Cost of Ownership Estimator
available when it’s time to crunch those numbers.