Return of U.S. manufacturing work has benefited Canadian, Mexican sectors

September 18, 2012

One way to see the significance of the return of manufacturing work to the U.S. is to judge how important the American industry has been in influencing the associated sectors in two of its major trading partners.

An adjustment of business strategy by many American firms has helped to bring manufacturing work back to the states, and this move has already supported a resurgence in the Mexican and Canadian industries.

According to the Financial Post, the growing amount of rhetoric attached to the 2012 President Election in the U.S. has upped the ante for both political parties, and both candidates have expressed continued support for American manufacturers.

This has led to a significant increase in the amount of attention that trade policies associated with onshoring – or the return of manufacturing work to the U.S. – have been getting. This could lead to an even brighter picture for American production sites, and thus could translate to future growth for Canadian businesses.

Since the U.S. could be increasing the amount of money that is directed toward its manufacturing sector, the outsourcing to China trend could be a thing of the past, especially given the lack of solvency for this model.

"It’s quite clear that China knows that this low-cost, manufacturing-based model is not sustainable, and that China is actually putting innovation in its national strategy and trying to become more of an innovation-based economy and move up the value chain," Ning Su, a professor of information systems at the University of Western Ontario, told the Post.

This and an increased need for technical work in the sector will boost the U.S. market even more in coming years, Su noted, a development that will help to establish a more powerful Canadian manufacturing industry.

"More high-end manufacturing – manufacturing that’s integrated with service and R&D," said Su. "Those are the jobs where the U.S. and Canada have a competitive advantage and those are the jobs that are able to create more value and even more jobs."

Mexico could join the U.S. and Canada as a manufacturing heavyweight in the coming years, as foreign direct investment in the country has risen sharply in the past several years, according to CNBC News.

"FDI in Mexico has fully recovered from the post-2008 decline, and we anticipate continued strength in manufacturing from autos and aerospace to keep up with U.S. and world demand," Sergio Martin, the chief economist on Mexico for investment banking firm HSBC, told the news outlet.