Wednesday, April 25, 2018

171,000 Manufacturing Jobs "Reshored" to the US Last Year

In a report released by the Reshoring Initiative called its 2017 Reshoring Report, the group shows data on U.S. reshoring and foreign direct investment (FDI) by companies that have shifted production or sourcing from offshore to the US.  According to Design News:
The report notes that last year, combined reshoring and related FDI announcements surged, adding over 171,000 jobs—up 2,800 percent from 2010. The report also shows upward revisions of 67,000 jobs from prior-year data, bringing the total number of manufacturing jobs brought to the US from offshore to 576,000 since the manufacturing employment low of 2010. The report claims that the 171,000 reshoring and FDI jobs announced equal 90 percent of the 189,000 total manufacturing jobs added in 2017.
It seems that the first mention of the word "reshoring" in this blog as back on February 12, 2013, so I've been following this trend at least since then (it links to an article here a year earlier).  The Reshoring Initiative (RI) includes data going back to 2007.  The factors involved in the decision to produce something offshore or here are wide ranging.  In the report, they question companies for the reasons of moving back (or investing in the US).  RI then ranked those reasons from 1 to 23 as factors against offshoring and factors favoring reshoring.
They're all instructive, but the top few are the ones that the most survey respondents cited.  292 respondents said that the quality of the imported goods combined with the amount of warranty cost and the cost of the rework they had to do to make the products usable was the biggest disadvantage.  The top five disadvantages were that, freight cost to ship goods to the US, the total cost, delivery and inventory problems.   The top reason for reshoring to the US was government incentives to move back, but that barely edged out the next two reasons: proximity to the customers and the availability of a skilled workforce and training for them.  Rounding out the top five were brand image (a desire to say "Made in the USA" to look better) and "eco-system synergies".  I have no idea what they mean by that, but it's generally a good idea to beware of people saying things like that.

Also, note how the numbers on the right column are greater than 100 much farther down the chart than the left column, and how the right column has bigger numbers in general.  It's a rather unified group of respondents.

RI noted that one of the reasons jobs are returning is that the cost differential between home-produced goods and landed goods from overseas has been shrinking for years. RI founder Harry Moser said:
“We know where the imports are by country, and we know the price difference between the foreign price and the US price. The total cost of foreign-made goods delivered to the US is a full 95% of the cost of US-produced goods,” said Moser. “We know how much you have to shift it to make the US competitive with China.”
Those who haven't worked in manufacturing probably don't understand how intense the pressure is to always do more with less.  In manufacturing, time is money and getting the job done right with minimal waste, and then always getting better is the mantra.  Maybe because of that, managers chase fads that promise better performance or lower costs.  The cost advantages of going offshore have to be much bigger than they are to overcome that column of reasons not to offshore.  

From Design News.


  1. Next step would be to end the H1B program and eliminate existing H1B.

  2. This surely must merely be a delayed result of policies, practices, and procedures implemented during the Obama administration. Yeah, that's the ticket!

  3. There is no way to evade competition with all humans over the long term. Ban competition in the marketplace with an iron curtain, and then later lose bigger from competition in a war. Borders and tariffs temporarily suppress Darwinian feedback mechanisms which you should prefer to have operating, so you don't fall behind the leaders' group. Central planning didn't work for the USSR or the PRC or Nazi Germany; socialism still doesn't work no matter who is in charge. Count up the score from the policy checklist in the _Communist Manifesto_, and you'll see the USA is doing USSR-lite.

    Which future war is the USA going to lose? I bet it will be the war against libertarians driving small armed drones.

    1. There is no way to evade competition with all humans over the long term.

      Which is largely why these jobs are coming back. (see items 1-6 on the left column and 2-6 on the right)

      Simply, the costs of going to the cheap-labor countries is much higher than the hourly labor rate. A company does no good going offshore for a 20% reduction in cost; it has to be 50% or more. Those big savings are going away. Part of that is that labor costs have been going up in those places, part of it is poor quality that has to be fixed here. If the labor here is more expensive, but productivity is better and the entire product cost is lower staying here, the jobs stay here.

  4. The top reason for reshoring to the US was government incentives to move back

    Good intentions are merely good intentions; they say nothing about the performance results policies produce. If performance data exists I evaluate using that exclusively. Good intentions were guesses pre-experiment, they are actually the hypothesis. We don't do science by inspecting the hypothesis instead of the experimental results.

    Suppose you are a member of some isolated human population that National Geographic found. I crash land onto your island, and when I wake up you are treating my infection by bleeding me with leeches instead of giving me an antibiotic. You are a do-gooder; you are still killing me. How much should I let your do-gooder-ness intentions restrain me while I fight off your treatment?

    The first recorded epidemic of puerperal fever occurred at the Hôtel-Dieu de Paris in 1646. Hospitals throughout Europe and America consistently reported death rates between 20% to 25% of all women giving birth, punctuated by intermittent epidemics with up to 100% fatalities of women giving birth in childbirth wards.

    In the 1800s Ignaz Semmelweis noticed that women giving birth at home had a much lower incidence of childbed fever than those giving birth in the doctor's maternity ward. His investigation discovered that washing hands with an antiseptic, in this case a calcium chloride solution, before a delivery reduced childbed fever fatalities by 90%. Publication of his findings was not well received by the medical profession. The idea conflicted both with the existing medical concepts and with the image doctors had of themselves. The scorn and ridicule of doctors was so extreme that Semmelweis moved from Vienna and was eventually committed to a mental asylum where he died.

    Actual do-gooders are keenly interested in feedback that their actions aren't producing the results they desire. Fake do-gooders just talk like do-gooders while they implement the totalitarianism which is their actual goal.