Bringing Work Home

It began to dawn on me that perhaps my country needed me more at home than overseas.
— Larry David

In this age of electronic communication and easy data access, for many of us, our work is almost always at our fingertips. Email gets delivered to our phones at all hours of the day, and it’s hard to resist staying on top of our work by reading and responding to these messages as soon as they arrive. As a writer, I have ideas flowing at all times of the day, so I’m very used to taking my work home with me. There’s nothing wrong with this approach, as long as we allow ourselves ample time to occasionally clear our minds from work as well. But “bringing work home,” when considering its effects on U.S. manufacturing, is an important concept that takes on an entirely different meaning.

“Reshoring” is bringing work back to the U.S. that was previously lost due to factors such as labor and production costs. This concept is gaining momentum throughout the country as companies are beginning to see that local production can potentially reduce total cost of ownership of purchased parts and tooling. According to the Reshoring Initiative, reshoring is “a fast and efficient way to strengthen the U.S. economy because it helps balance the trade and budget deficits, reduces unemployment by creating good, well-paying manufacturing jobs, and fosters a skilled workforce.”

The Reshoring Initiative recently released a 2018 data report indicating some significant progress. Last year, the number of companies reporting new reshoring and foreign direct investment (FDI) was at the highest level in history—up 38% from 2017. The combined reshoring and related FDI announcements totaled more than 145,000 jobs, the second highest annual rate in history. Including upward revisions of 36,000 jobs in prior years, the total number of manufacturing jobs brought to the U.S. from offshore is more than 757,000 since the manufacturing employment low of 2010.

The Reshoring Initiative largely attributes the increases to greater U.S. competitiveness due to corporate tax and regulatory cuts. Similar to the previous few years, FDI continued to exceed reshoring in terms of total jobs added, but reshoring has closed most of the gap since 2015.

The 2018 report contains data on U.S. reshoring and FDI by companies that have shifted production or sourcing from offshore to the U.S. It includes cumulative data from 2010 through 2018, as well as projections for 2019. The numbers demonstrate that reshoring and FDI are major contributing factors to the country’s rebounding manufacturing sector.

“We publish this data annually to show companies that their peers are successfully reshoring and that they should reevaluate their sourcing and siting decisions,” says Harry Moser, founder and president of the Reshoring Initiative. “With 5 million manufacturing jobs still offshore, as measured by our $800 billion/year goods trade deficit, there is potential for much more growth. We call on the administration and Congress to enact policy changes to make the United States competitive again. Our Competitiveness Toolkit is available to help quantify the impact of policy alternatives, including a stronger skilled workforce, continued corporate tax and regulatory reductions as well as a lower U.S. dollar.”

Here’s a closer look at findings presented in the report:

Reshoring and FDI have driven 31% of the total increase in U.S. manufacturing jobs since 2010 and 3.3% of total U.S. manufacturing employment as of 12/31/18.
Reshoring from China accounts for 59% of all reshoring.
Although China topped Germany for the greatest number of FDI jobs announced since 2010, China announced 12% fewer in 2018 than in 2017.
Quality, freight cost and total cost make up the top offshore drivers of the trend.
Proximity to market, government incentives, supply chain optimization, higher productivity, skilled workforce, and brand image/made in the USA serve as the top domestic drivers.
Reshoring has been increasing at a similar rate as FDI, indicating that U.S. headquartered companies are starting to understand the U.S. production benefit that foreign companies have seen for the last few years.

From this perspective, bringing work home is definitely a worthwhile goal. The complete Reshoring Initiative report is available at short.productionmachining.com/2018reshor.