Major Drivers of Reshoring Successes

I thought I'd share this summary of findings provided by the The Reshoring Initiative’s 2015 Reshoring Report.  The report contains data on U.S. reshoring and Foreign Direct Investment (FDI) by companies that have returned or added new U.S. production from offshore. The report includes cumulative data from 2007 through 2015, as well as detailed data for 2015.

 

“We publish this data annually to show companies that sourcing domestically is an increasing trend in the United States,” said Harry Moser, founder and president of the Reshoring Initiative.  “With 3 to 4 million manufacturing jobs still offshore, as measured by our $500 billion/year trade deficit, we see potential for even more growth, and we hope this data will motivate more companies to reevaluate their sourcing and siting decisions.”

 

The report explains that the combined reshoring and FDI trends remained strong in 2015, adding 67,000 jobs and bringing the total number of manufacturing jobs brought from offshore to more than 249,000

since the manufacturing employment low of February 2010. The overall trend was off 6 percent from 2014 due to: the strong dollar; low oil prices and shipping rates; and most competitor countries having weaker economies than the U.S. Recently, FDI has been stronger than reshoring. Both trends are based on the logic of producing in the local market, otherwise known as localization.

 

Despite the small downturn, for the second year in a row the number of jobs returning to the U.S. remains on par or slightly higher than the number of jobs leaving. By comparison, in 2000-2007, the United States lost, net, about 220,000 manufacturing jobs per year to offshoring. The steady decrease in the number of jobs lost per year, to zero or a net gain, continues to demonstrate and build confidence that reshoring and FDI are important contributing factors to the country’s rebounding manufacturing sector.

 

Reasons companies gave for reshoring and FDI include government incentives, ecosystems/localization, proximity to customers, and a skilled workforce. Companies also cited lower quality, supply interruption (this category had the largest increase from last year), high freight costs and delivery as leading problems offshore. Cumulatively, rising wages and total cost have been major drivers in reshoring decisions.

 

Regionally, the trend remained strongest in the Southeast and Texas, but in 2015 the West displaced the Midwest to hold second place for most jobs shifted from offshore. Data for this report comes from the Reshoring Initiative’s library of more than 3,000 published articles, privately submitted reshoring case studies and privately documented cases. The report provides data and analysis in 11 different categories, ranging from the number of manufacturing jobs lost to offshoring, to reasons cited for reshoring, to a breakdown of data by industry, country, region and state. It also includes data on international reshoring and nearshoring trends.

 

Many studies predict an increase in U.S. competitiveness through the year 2020, despite

headwinds of the high dollar. U.S. companies can use reshoring trend data to determine where

to obtain a greater competitive edge within the global economy.

 

Click here for full report.