THE BLOG
10/25/2013 09:03 am ET | Updated Dec 25, 2013

Reshoring Means More Jobs

For years, the business news media has provided a drumbeat of anecdotal reports of U.S. manufacturing companies bringing production back from overseas -- commonly called reshoring -- but there have always been naysayers who insist the underlying data do not support evidence of a serious reshoring trend. I have seen reports of major league reshoring by Apple, Motorola, General Electric, and others, and we all saw the announcement by Walmart that it will steer billions to U.S. manufacturers, but I have been waiting to see this movement reflected in the economic data.

But now there is growing evidence that the statistics are catching up with the anecdotal evidence and the reshoring trend is real. The Boston Consulting Group which has been tracking this phenomenon said more than half of U.S. based manufacturing executives at companies with sales greater than $1 billion are planning to bring back production to the U.S. from China, or are actively considering it. According to the BCG survey of 200 decision makers at companies across a broad range of industries, the share of executives who are planning to "reshore" or are considering it rose to 54 percent from 37 percent a year ago.

"Over the past couple of years, we've projected an improvement in U.S. manufacturing competitiveness by 2015 that would help drive an American manufacturing revival," said Harold L. Sirkin, a BCG senior partner and co-author of the study. "The results of our latest survey make clear that a profound shift in attitude is beginning."

None of this comes as a surprise to my friend Harry Moser, founder and president of the Reshoring Initiative (www.reshorenow.org). Moser says an estimated 80,000 manufacturing jobs have returned to the U.S. from overseas, about 60 percent of them from China. "More companies are looking beyond the basic costs such as labor and are weighing the impact of dislocation of engineering and manufacturing, intellectual property concerns, supply chain risks, quality issues, time to market delays and transportation," he said. That "total cost of ownership" can add 20 percent to the production cost. Also, wages in China have risen 320 percent since 2000. Many companies shifting production to China "didn't do the math," Moser said.

The people at BCG support Moser's thesis. "The wide range of reasons executives cite for shifting production shows that companies are becoming more sophisticated in their understanding of all the factors that must be considered when deciding where to manufacture," said BCG partner Michael Zinser. "When you look at the total cost of production for many goods, the U.S. appears increasingly attractive."

BCG projects that production reshored from China along with rising exports driven by increasing competitiveness could create 2.5 million to 5 million factory and related jobs in the U.S. by 2020. This is more than mere anecdote -- it shows a major shift is underway that augurs well for increasing manufacturing employment. Now if only our government can manufacture an economic strategy...

Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later as President of the Manufacturing Institute. Jerry is available for speaking engagements. October 2013