2020 Recap: Reshoring of U.S. Manufacturing Increases

While previous Coronavirus predictions from March and April have been disproven with time, there’s one pandemic prediction that seems to stick. Covid complications have, so far, totally transformed the global supply chain from manufacturing to distribution–urging U.S. manufacturers to reshore operations.

This is a huge win for American manufacturing as domestic jobs slowly come back after years of offshoring. According to the Bureau of Labor Statistics, the U.S. lost 5.8 million manufacturing jobs from the middle of the year 2000 to the middle of 2010. Fortunately, the United States has been slowly regaining manufacturing jobs since 2010.

This year, the total jobs regained from overseas amounted to roughly 1 million. Harry Moser of The Reshoring Initiative predicted the total in December.

“The projected job announcements for 2020 is 110,000, which will bring the total to over 1 million by year’s end,” said Moser. “The combined reshoring and foreign direct investment (FDI) announcements in 2019 totaled more than 117,000 manufacturing jobs, plus an additional 24,800 in revisions to the years 2010 through 2018…Additionally, the number of companies reporting new reshoring and FDI was at the second highest annual level in history: 1,100 companies.”

Harry moser of the reshoring manufacturing initiative

Moser started the Reshoring Initiative in 2010 as a tool for businesses to weigh the costs and benefits of reshoring versus offshoring manufacturing. He says that many manufacturers didn’t realize hidden costs of doing business offshore, such as Intellectual Property theft, danger of counterfeit parts, the risk factors of political instability, natural disasters, riots, strikes, technological depth and reserve capacity of suppliers, and currency fluctuation as well as effect on innovation, product liability risk, annual wage inflation, and currency appreciation.

However, as manufacturing jobs continue to return, the use of automation is quickly gaining momentum.

A recent study by Bank of America found that a large percentage of manufacturers plan to reshore operations closer to where products are used and sold. While reshoring was already a topic of concern due to the ongoing U.S.-China trade war and environmental initiatives, the pandemic has shined an even brighter spotlight on the issue.

The problem became quite apparent in March and April as states struggled to maintain hospital supplies for staff and patients. Keeping production domestic would give the U.S. supply chains a certain level of resiliency and a better fighting chance during unpredictable global periods.

“While disruptions from the pandemic might have acted as a catalyst to accelerate reshoring, we believe that the underlying structural reasons are grounded in an ongoing shift to ‘stakeholder capitalism’ where corporations focus on shareholders’ interests, as well as the broader community of consumers, employees and the state,” the researchers said.

Although the reshoring initiative is gaining momentum, so is automation in manufacturing.

Manufacturing Jobs in Automation

Automating the manufacturing process means higher production levels and cheaper overhead costs; However, what does that mean for the thousands of jobs that are reshoring?

This just means that manufacturers will need skilled workers with more versatility to work with industrial software systems and do other unique tasks. Assembly lines that were once used to only make a certain product can now be used to make a dozen different items. Obviously, this skilled talent is hard to come by.

The digitalization may be a means of maintaining production despite the shortage of skilled workers, says Saar Yoskovitz, CEO of digital machine-health company Augury. “It’s not about replacing jobs,” he said. Companies are “having a hard time just staying in place. How do we double the manufacturing capacity in the U.S. if we don’t have enough people?”

Manufacturing in 2021

As Joe Biden’s inauguration approaches, the former Vice President has plans to continue in Trump’s path of reshoring, stating that his plan is to ensure the future in “Made in All of America”

.Biden announces plan to invest in American manufacturing

Biden’s American manufacturing and innovation strategy includes six factors listed on his official website:

  1. BUY AMERICAN. Make “Buy American” Real and Make a $400 billion Procurement Investment that together with the Biden clean energy and infrastructure plan will power new demand for American products, materials, and services and ensure that they are shipped on U.S.-flagged cargo carriers.
  2. MAKE IT IN AMERICA. Retool and Revitalize American Manufacturers, with a particular focus on smaller manufacturers through specific incentives, additional resources, and new financing tools.
  3. INNOVATE IN AMERICA. Make a New $300 Billion Investment in Research and Development (R&D) and Breakthrough Technologies — from electric vehicle technology to lightweight materials to 5G and artificial intelligence — to unleash high-quality job creation in high-value manufacturing and technology.
  4. INVEST IN ALL OF AMERICA. Ensure Investments Reach All of America so we draw on the full talents and invest in the potential of all our communities and workers. America is not at full strength when investments, venture capital, educational opportunities and paths to good jobs are limited by race, zip code, gender, gender identity, sexual orientation, disability, religion or national origin. Biden will ensure that the major public investments in his plan — procurement, R&D, infrastructure, training, and education — reach all Americans across all states and regions, including urban and rural communities, with historic investments in communities of color and an emphasis on small businesses.
  5. STAND UP FOR AMERICA. Pursue a Pro-American Worker Tax and Trade Strategy to give our manufacturers and workers the fair shot they need to compete for jobs and market share.
  6. SUPPLY AMERICA. Bring Back Critical Supply Chains to America so we aren’t dependent on China or any other country for the production of critical goods in a crisis.

Biden’s plan predicts to gain the U.S. over 5 million manufacturing jobs over the course of his term.

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