Are Manufacturing Jobs Coming Back To America? The Answer is Yes.

Manufacturing in America is having a gain on jobs. The long answer is a little more technical though. Knowing a skilled trade from welding to programming machines is paying off in today’s economy. It’s estimated there will be 2.4 million jobs in manufacturing that won’t be filled in the coming 8 years without proper training.

Harry Moser answered this question recently on Quora, and part of his reponse is below.

Unquestionably, yes manufacturing jobs are coming back. This chart shows Bureau of Labor Statistics December 31 mfg. employment since 1997. The superimposed regression line is based on the years 1997, just before China joined the WTO, thru 2006, just before the Great Recession. 2018 mfg. employment is about 3.3 million higher than would have been forecast in 2006.

America manufacturingMfg. employment is thus growing moderately in headcount and rapidly relative to the earlier trend. After the previous recession, around year 2000, mfg. employment plateaued rather than recovering. The growth one might have expected from economic recovery was lost primarily to offshoring, a small portion to automation. The superior results since 2009 are largely due to a decline in the rate of offshoring of jobs and a dramatic increase in the addition of jobs via reshoring by U.S. companies and FDI (foreign direct investment) by foreign companies. The chart below shows that the sum of these two trends equaled about 6,000 jobs in 2010 and rose to 180,000 by 2017 before moderating in 2018. The drivers of the recovery are: higher Chinese wages, increased recognition of Total Cost, including all of the costs and risks of offshoring, adding on average 15 to 20% of Ex-Works price.

Manufacturing has made good progress but not enough. The non-petroleum goods trade deficit has continued to grow because most U.S. goods are still not price competitive. Chinese goods’ Ex-Works price averages about 70% of U.S. Ex Works price. See the blue curve in the chart below. Total Cost is in red. Total cost plus 15% tariffs is in yellow.

America manufacturingBalancing the $800 billion goods trade deficit will increase U.S. mfg. employment by about 5 million, 40%, at current levels of U.S. productivity. To make that happen over 20 years we need some combination of: much larger and better trained skilled workforce, 20% lower USD, a VAT (value added tax) or BAT (Border Adjustment Tax), healthcare costs at the European level, an end to IP theft and longer term corporate strategies with greater capital investment and training. The 40% potential increase in output gives us the opportunity to have both high rates of productivity growth and increased mfg. employment for decades.

Interested readers can find more data and the tools to accelerate job increases and win more orders vs. foreign competitors at www.reshorenow.org.

Meet Harry Moser at Made In America 2020 in Detroit on Manufacturing Day, October 2nd-4th. Harry is the President of the Reshoring Initiative and serves on the U.S. Investment Advisory Council for the Commerce Department.

Display what you’re making in America today at Made In America 2020.

2 Comments
  1. Interested in rural community participation. These communities have lost a lot of Manufacturing over the past 30+ years and am wondering if this is an area of interest and who would be the person to talk with. I have been looking at some small town/counties that might have the resources to host some MFG restarts.

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