Are Manufacturing Jobs Returning To The U.S. At Last?


reshoring-to-u.sreshoring-to-u.sOne of the silver linings in the economic calamity known as the Great Recession was a surge in the cost-competitiveness of U.S. manufacturing. When the downturn began at the end of 2007, America’s manufacturing sector had dipped below double-digits as a percentage of our GDP for the first time in nearly a century (bottoming out at about 9 percent).

Large manufacturers circled their wagons and squeezed every ounce of productivity they could from downsized workforces. They also tightened the screws on the remaining vestiges of organized labor, most notably autoworkers and aircraft machinists. GM’s new deal with the UAW, for example, reduced the hourly wage for assembly-line newbies to $15. Seemingly overnight, U.S. vehicle assembly facilities were positioned not only to undercut ultra-efficient Japanese transplants but also to win the battle with foreign locations for new-model production lines.

Then came the remarkable news that the inexorable exodus of U.S. manufacturing jobs to China and other cheap-labor bastions had not only slowed, but in some sectors actually began to reverse course. At first, this phenomenon–known as reshoring–seemed like a temporary anomaly, prompted in part by an unexpected labor shortage in China that was a byproduct of the PRC’s rising middle class. With developing nations like Vietnam waiting in the wings to take up the slack, it was easy to assume that the currents carrying the migration of manufacturing jobs back to the U.S. could shift in the other direction at any time.

But now comes a new survey from Boston Consulting Group of senior manufacturing leaders of companies with at least $1 billion in sales. The survey reveals that the reshoring trend continues–and appears to be picking up steam.

The survey results show that the number of companies bringing production jobs back to the U.S. rose from 13 percent to 16 percent during the past year. Those who said they would consider returning jobs rose from 20 to 24 percent. The best news of all: the executives who responded to the survey projected that, over the next five years, their U.S. percentage of total production would rise by 7 percent to an average of 47 percent [we’re going to resist the temptation to insert a Mitt Romney joke here].

The survey results are welcome news, but when it comes to manufacturing we think there’s no better leading indicator than iron coming out of the ground, traveling through the crucible of U.S. mills and rolling out as high-quality steel.

Don’t believe they’re shaking off the rust in the Rust Belt? Well, you haven’t been to Ohio lately, where U.S. Steel is investing $1.6 billion in a plant expansion near Lake Erie and foreign player V&M Star is pouring $650 million into a new steel mill in Youngstown. If that doesn’t convince you, take a side trip to Chattanooga, where VW decided this year to double down on its $1-billion commitment to automotive manufacturing in Tennessee (the alternative was an expansion of its facility in Mexico).

Nobody’s suggesting that we’re witnessing a return to the halcyon days of the mid-20th century, when blue-collar “lunch-pail” jobs building stuff formed the backbone of the U.S. workforce.

But in an era when there’s growing concern about rising tides in the oceans, this is one incoming wave we can all stand up and cheer.




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