Solving the Reshoring Riddle
Companies are lining up to reap the benefits of bringing manufacturing operations back to the U.S., but some have encountered a skills gap.
In the past couple of decades, companies have turned to offshoring to save on labor and production costs. But rising labor costs in China, reduced U.S. corporate taxes and regulations, President Donald Trump’s stated push to bring manufacturing jobs back to America and technological advances, among other factors, are causing companies to rethink their offshoring efforts.
“In the early 2000s, we were losing a net of about 220,000 manufacturing jobs a year” due to offshoring, says Harry Moser, founder and president of the Chicago-based Reshoring Initiative, which is dedicated to returning manufacturing jobs to the U.S. In 2016, 25,000 more jobs were gained through new reshoring and foreign direct investment (FDI) than were lost to offshoring, he says.
The number of reshoring plus FDI manufacturing job announcements averaged about 17,000 during the first three quarters of 2016, Moser says. However, in the fourth quarter of 2016, the number of returning jobs announced by companies rose to 30,000, and has since averaged about 60,000 per quarter. “Clearly, something has changed,” he says.
For Walmart, that something is customers who say that where a product is made is second only to price. The Bentonville, Arkansas-based company is making inroads on its campaign to buy an additional US$250 billion in products supporting the creation of American jobs through 2023. The “America at Work” program, says Walmart spokesperson Scott Markley, “is having a tangible impact on communities across America. In the four years since we launched our initiative, we’ve seen factories opened, jobs created and American products added to our shelves in stores and online.”
Walmart’s scale makes the company “uniquely positioned to accelerate efforts and lead by example,” he says. “We are working to meet our commitment in a variety of ways, including buying more from existing domestic suppliers, doing business with new domestic suppliers and, where it makes economic sense, helping current suppliers reshore their international production.”