"Reshoring" Gaining Momentum Among U.S. Manufacturers

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U.S. manufacturers have moved millions of jobs overseas in search of cheaper labor, less expensive production processes, and a stronger bottom line. In recent months, however, American companies have started to bring some of these jobs back to the United States. This phenomenon, called "reshoring," is occurring due to higher costs of manufacturing in other countries and the increasing economic and other benefits of production in the United States. A brief look at reshoring and the factors that drive it demonstrate that U.S. manufacturers are in a prime position to bring more jobs and production back to the United States.

A Boston Consulting Group study from September 2013 found that over 50 percent of surveyed executives at large U.S. manufacturers said that they have plans to reshore production from China or are "actively considering" it. Recent events demonstrate that U.S. companies are serious about reshoring: Boeing, Ford, and Little Tikes are only a few of the well-known companies that have already brought jobs back to the United States or have announced plans to do so. This recent trend is not exclusive to U.S. companies. The Wall Street Journal reported in September that toilet manufacturers from Colombia and Japan are also expanding production capacity in the U.S. and creating jobs in communities in Georgia, Ohio, and Missouri.

Multiple factors explain why manufacturers are reshoring jobs and production to the United States. Labor and transportation costs in China have increased. Manufacturing a product in the United States both reduces transportation costs and mitigates transportation risks. Another important factor that multiple companies cite is the growth of U.S. energy production, which has reduced the costs of inputs, transportation, and production in the United States. Furthermore, as Scott Paul of Alliance for American Manufacturing has stated, there is a "surge of interest" among Americans in buying goods that are "Made in the U.S.A."

While each manufacturer has a variety of motives for reshoring jobs and production, it is clear that many manufacturers are responding to strong economic incentives to create jobs and expand production in the United States. The United States appears poised to regain some of the jobs that were "offshored" and factories that were closed. This is a positive sign for U.S. manufacturing and the economy as a whole.

- Clint Long

Topics:  DOL, Energy, Manufacturers, Offshoring

Published In: General Business Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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