While it may still be too early to call \”reshoring\” a trend (see Manufacturing May Be Coming Back Home), if the President has his way, it soon will be. Last week, the White House announced a plan to encourage American companies to \”insource.\”
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With the \”insourcing initiative,\” the administration says it hopes to encourage growing and new companies to keep factories and production facilities in the U.S. and incentivize a return from overseas.
The announcement laid out five areas the administration plans to focus on to attain this. They include:
- Creating incentives for businesses to invest in hiring and expanding through expansion of tax credits and reforming the corporate tax code;
- Leveling the global playing field for U.S. companies through trade agreements and enforcement of trade laws;
- Improving the U.S. workforce through training and education;
- Providing financial and technical support for companies looking to grow; and
- Investing in infrastructure.
Many of the new initiatives are tied to the President’s American Jobs Act, a proposal submitted to Congress last fall. That plan has come under fire from organizations such as the National Federation of Independent Business for not addressing the real issues underlying unemployment in the U.S.
\”In terms of GDP, the total value of the goods and services we produce, we are producing about as much as we did at the peak in 2007, but we employed 7 million fewer workers to get the job done,\” says William Dunkelberg, chief economist for the NFIB, in his weekly Web series \”Your Bottom Line.\”
Manufacturing may be increasing, Dunkelberg says, but so is productivity. \”We’re making a lot of stuff, but we don’t need people to do it.\”
The real problem is the housing market, according to Dunkelberg. Based on demographics, the U.S. is short about 1 million units in the housing market, and a boom to replace those is still a few years out. \”In the meantime, all the jobs that are associated with building a million housing units … and all the jobs tied to it … are missing,\” he says. Until that is addressed no plan will be enough to stimulate the economy.
