Myths and rumors continue to dog data related to offshore and outsourced manufacturing. Believe it or not, with reshoring efforts and new kinds of manufacturing, jobs in the U.S. may actually be increasing.
Plusses and negatives about offshore manufacturing represent a hot topic, not only in the world of commerce, but increasingly in political dialogue and dinner-table conversation. On the one hand, Americans can buy cheaper goods when manufacturers create offshore facilities; on the other hand, the impact on American workers is undeniable.
Understanding the real costs and benefits of manufacturing out of the United States demands a look at data—not just opinions about companies that build facilities off shore.
According to US News & World Report, jobs outsourced to China have diminished American employment opportunities and have helped contribute to wage erosion since 2001. Most of the jobs lost or displaced by trade with China between 2001 and 2013 were in manufacturing industries (2.4 million jobs, or 75.7 percent, the Economic Policy Institute reports.
On the other hand, numbers of manufacturing jobs in the U.S. are actually increasing. The Bureau of Labor Statistics reports that while employment in manufacturing industries changed little in July, 2017 (+16,000), nonetheless, employment in the industry has increased by 100,000 since last November. Employment in durable goods manufacturing has been stronger than in nondurable goods. (Durables goods have added 71,000 jobs since November, compared with 29,000 in nondurables.)
Has the tide turned, with respect to jobs returning to U.S. manufacturing? The U.S. Reshoring Initiative was established to “help manufacturers realize that local production, in some cases, reduces their total cost of ownership of purchased parts and tooling. The Initiative also trains suppliers how to effectively meet the needs of their local customers, giving the suppliers the tools to sell against lower priced offshore competitors.”
The organization focuses on reshoring, or bringing manufacturing jobs back to the U.S. from offshore sites, as well as on foreign direct investment (FDI). Financial advantages accrue by producing closer to a company’s customers, the institute maintains. It says than 338,000 manufacturing jobs have been brought to the U.S. from offshore since 2010 through reshoring and FDI. This number represents about 32 percent of the 805,000 increase in U.S. manufacturing jobs since 2010.
Manufacturing data from the Bureau of Labor Statistics indicates that manufacturing employment is trending upward since its lowest point in 2010. Regardless of what screaming headlines say about the loss of U.S. manufacturing, the data speaks for itself:
Whether the reshoring initiative is partly responsible for this is, of course, anybody’s guess. Regardless of its source, an upward tick in manufacturing employment in the U.S. is undoubtedly good news. Keep watching data to see this trend.