“Reshoring” initiatives by major employers are relocating manufacturing jobs from China and other countries back to the U.S.
The export of manufacturing jobs to China and other low-cost locations around the world is being reversed as corporation reshore significant portions of their labor workforces back to the U.S.
According to a study by the Hackett Group, the flow of manufacturing jobs to the U.S. is expected to continue and achieve critical mass over the next two to three years the landed cost gap between the U.S. and China decreases. Chinese wage inflation and improvements in manufacturing productivity are also factors behind the trend.
At the present time, more than 75 percent of U.S. manufacturing companies have had some presence in China for at least three years. It’s estimated that the number of manufacturing positions that have been exported to China total between 15 and 20 million jobs.
However, the study found that companies are planning to reshore as much as 20 percent of their offshore capacity between 2012 and 2014. The movement of jobs back to the U.S. could have an important impact on the nation’s job market, offsetting the number of jobs that would normally move offshore and stabilizing the flow of U.S. manufacturing positions overseas.
“This is good news for the American worker as growth in the U.S. manufacturing sector keeps more high-paying jobs at home,” said David P. Sievers, Principal, Strategy and Operations Leader for The Hackett Group.
The research also found that the shrinking total landed cost gap could create a tipping point resulting in an acceleration of reshoring. “As the total landed cost gap falls below 15 percent, the economic opportunity will require more companies to rebalance their supply chains and move capacity back closer to customers in the U.S.,” said Sievers.