More Companies Are Reshoring to Capitalize on the ‘Made in USA’ Label and Automation

“The bleeding of manufacturing jobs to offshore has stopped,” the authors wrote. “In the last decade, the U.S. has gone from losing about 140,000 manufacturing jobs per year to gaining 10,000 or more per year. There are still as many as 4 million manufacturing jobs offshore—a huge potential for U.S. economic growth.”

Those U.S. companies who reshore are particularly keen on the homegrown image of a “Made in the USA” label, as well as the opportunity to automate and redesign their products locally. Reasons against offshoring include lower quality, longer lead times, high freight costs, longer delivery times and rising wages. Conversely, foreign firms are investing here because they want to take advantage of government incentives and a skilled workforce.

Reshoring in 2014 was strongest in the Southeast and Texas because of the region’s lower wages, lower taxes and right-to-work laws. Reshoring is balanced between high- and low-tech jobs, while foreign direct investment is stronger in high-tech.

The top industries for reshoring include transportation equipment, electrical equipment, appliances and components, computers and other electronic components. Foreign direct investment is more heavily weighted toward transportation equipment, because of the ongoing investment in automotive assembly plants and related suppliers.

More than half of the reshoring in 2014 came from operations that had been in China, followed by Mexico and developing countries, as well as Canada, likely due to a recent period of high currency value. However, not as many U.S. companies with operations in Europe are reshoring, likely due to less rapid wage gains, low intellectual property risk and higher quality of goods produced there.