Manufacturing facilities 'reshore' some work from abroad

March 14, 2012

During the worst parts of the Great Recession, U.S. manufacturing jobs were disappearing at a furious pace. In the beginning of 2007, roughly 14 million Americans were working in the sector, but by 2010, only 11.5 million were left in the industry, according to National Public Radio (NPR).

The news source reported that since 2010, employment in the sector has been ticking back up, with companies adding roughly 400,000 manufacturing jobs. There are several contributing factors to this trend, but one of the biggest reasons for the return of this work has been the "reshoring" of operations by businesses.

NPR reported that the trend has been outlined by employers who are seeing an uptick in the number of positions they must fill to meet demand, but experts have noted that it is difficult to accurately measure the level of jobs tied to work returning from other countries.

Howard Hauser, a vice president with Hiawatha Rubber Co., noted that for a long time, manufacturers followed a herd mentality in sending work overseas. They all wanted components of their products to be produced in low-wage, emerging markets like China.

"They were looking at the piece price. And it looked like, 'We're going to save a lot of money,'" he told the news source. "But the bottom line was they didn't save nearly as much as they thought. And with the quality issues, they're just not getting product that's acceptable for the customer."

Hauser, and many others like him, have adjusted their business strategy and are looking to reshore components of their production.

According to Crain's Cleveland Business, businesses that are looking for low-cost markets to manufacture their products are increasingly turning their eyes back to the shores of the U.S. Compared with previous years, American manufacturing is an affordable option.

"The costs in China and other places have been rising so rapidly, it's becoming more obvious to companies they should bring a lot of the work back to the U.S.," Harry Moser, a retired manufacturing executive, former Cleveland-area resident and founder of the Chicago-based Reshoring Initiative, told the news source.

A combination of rising labor costs in China, high – and rising – fuel prices and increased American competitiveness, are combining with a new sense of patriotism centered on making goods in the U.S. According to Crain's Cleveland Business, companies are beginning to see that there is no reason to send work overseas.