With the 2012 U.S. presidential election approaching, job creation has been a hot topic, and the trend of reshoring — manufacturers bringing jobs back to the U.S. from low-wage locations overseas — has been gaining more attention among politicians and the public alike.
From the State of the Union address to presidential debates, reshoring, or “insourcing” as the current administration calls it, seems to be surfacing everywhere. For politicians, the popular question is: How can the U.S. build this momentum and persuade more manufacturers to bring jobs home? Recently, President Barack Obama met with executives from more than a dozen companies to ask them exactly that and announce plans for new tax proposals that would reward companies for creating jobs in the U.S. and possibly eliminate tax advantages for moving them overseas.
Hopeful Signs
With high-profile manufacturers like Caterpillar, Ford and others shifting production back to the U.S. from China, Japan and Mexico, Americans have every reason to feel hopeful about reshoring. Rising labor, construction and transportation costs in Asia and Latin America, along with quality control issues and lax oversight of intellectual property, are forcing many companies to take a closer look at the real and hidden costs of operating overseas.
And, overall, manufacturing has picked up over the last two years, with 334,000 additional jobs, according to Labor Department statistics. But the U.S. still has a long way to go to recoup the millions of jobs lost since its manufacturing heyday.
Low-cost labor states in the South currently hold the biggest advantage for attracting new manufacturing plants to the U.S. market, including states such as Alabama, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Texas. In Arkansas, a Caterpillar facility in North Little Rock is among several across the U.S. competing for a new plant the company is bringing back from Japan this spring.
When asked about the resurgence of U.S. manufacturing during a CNBC interview at the plant, Arkansas Gov. Mike Beebe touted the state’s low taxes and high quality labor, but also noted that “what we’ve seen lately is American citizens responding by saying we’re going to buy American.”
The Domestic vs. Global Disconnect
But is the “Made in America” stamp enough to keep the reshoring momentum going? Politicians often make that assumption, but to the manufacturer making the decision, they “increasingly see the world as a place where their products can be made anywhere through global supply chains … and sold everywhere,” notes Thomas Friedman in a recent New York Times column.
“Outsourcing” is a passe term for many CEOs who view their business globally and are more concerned with accessing “the best quality talent at the lowest cost, wherever it exists,” Friedman adds.
In Friedman’s view, the secret to bringing more jobs back to America is being as innovative as possible. Making sure Americans are present in every link of the global supply chain — from creating and designing products to manufacturing and distributing them to marketing and selling.
What do you think it will take for the U.S. to attract more manufacturing jobs? Are politicians on the right track with proposed incentives to bring plants back home?
