'Bleeding of Manufacturing Jobs' Offshore Halted - Modern Distribution Management

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‘Bleeding of Manufacturing Jobs’ Offshore Halted

While 2015 stemmed the tide of offshoring jobs, reshoring taking a slower track.
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The "bleeding of manufacturing jobs to offshore" stopped in 2015, according to new data released by the Reshoring Initiative. But the U.S. still has a long way to go in terms of bringing back previously outsourced jobs.

In the last decade the U.S. has gone from losing about 220,000 manufacturing jobs per year to breakeven. The Reshoring Initiative estimates there are still 3 million to 4 million manufacturing jobs offshore.

While a lot of focus in news and politics is placed on the negative aspects of offshoring, the latest report reveals more incidents of positive factors driving the shift. Government incentives was by far the largest driver, but the proximity to customers, a move toward localization and access to a skilled workforce were also key factors in 2015.

The move toward localization continues to grow, according to the report. Producing locally not only reduces the time to market, but for forward-thinking companies, it allows them to be more responsive to regional preferences and shifts in demand. As a result, they may be more competitive even against products being imported from lower cost countries.

The biggest challenge to reshoring may be the strength of the U.S. economy, particularly as compared to other countries. A strong U.S. dollar increases the relative cost of production, and a tighter labor market leads to higher wage demand. That shouldn't discourage companies from reshoring, the report says, but it should be taken into account when considering the total cost of moving operations.

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