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Reshoring Data Reveals Progress, Problems for Reclaiming Jobs

The Reshoring Initiative, a not-for-profit organization that helps manufacturers recognize the profit potential for adopting local sourcing and production, issued its 2015 Reshoring Report, documenting progress that the U.S. manufacturing sector has made over the past decade in offsetting the job losses and capital investment, and recognized that “rapid job loss” has been curtailed, while conceding that “huge challenges to bringing back the 3-4 million manufacturing jobs previously lost to offshore.”

The report includes data on reshoring of formerly offshore jobs and foreign direct investment (FDI) by companies establishing new domestic manufacturing for 2007-2015. Both factors are keyed to manufacturers’ determination to produce goods in the market where they are intended to be distributed, known as ‘localization.’

The complete— Reshoring Initiative Data Report: Reshoring and FDI Continue Strong in 2015 — is available online.

For 2015, the combination of reshoring and FDI continued to be strong, adding 67,000 domestic manufacturing jobs. Since February 2010 (a low point for U.S. manufacturing employment), more than 249,000 manufacturing since the manufacturing employment low of February 2010, the group indicated.

However, the overall trend fell 6% from 2014 due to a strong U.S. dollar; low oil prices and shipping rates; and weaker economies in competitor manufacturing countries.

Among the reasons for reshoring and FDI documented for 2015 are government incentives, ecosystems/localization, proximity to customers, and a skilled workforce. Offshore problems that companies cited included lower quality, supply interruption, high freight costs, and delivery.

Regionally, the reshoring trend remained strongest in the Southeast and Texas, though in 2015 the West overtook the Midwest for second place among regions gaining the most jobs from offshore.

Despite the downturn, 2015 was the second consecutive year that manufacturing jobs returning to the U.S. remains equal to or slightly higher than the number of jobs leaving. By comparison, for 2000-2007, the U.S. market lost about 220,000 manufacturing jobs annually due to offshoring.

“We publish this data annually to show companies that sourcing domestically is an increasing trend in the United States,” stated Reshoring Initiative founder and president Harry Moser. “With 3 to 4 million manufacturing jobs still offshore, as measured by our $500 billion/year trade deficit, we see potential for even more growth, and we hope this data will motivate more companies to reevaluate their sourcing and siting decisions.”

Moser, the former president of machine tool builder GF AgieCharmilles, established the Reshoring Initiative to help manufacturers recognize the profit potential of embracing local sourcing and production. Among the resources it offers companies to make supply chain sourcing decisions is its Total Cost of Ownership Estimator®, a calculating tool to help account for and understand relevant offshoring costs (e.g., inventory carrying costs, shipping expenses, intellectual property risks, etc.)

SOURCE: American Machinist