Ever since a bunch of sharp MBAs armed with their spreadsheets determined that deep cuts in direct labor costs could be gained through chasing low wage geographies, a reaction set in to convince companies and the US government that shipping jobs overseas was bad economics and bad for the economy.

A chunk of my responsibilities for several years in a manufacturing firm was analyzing and recommending ways to cut costs. I didn’t have responsibilities on the growing revenue side of the equation; rather I was charged with helping boost profitability through cutting direct costs. By the way, back then cutting labor cost wasn’t worth the effort.

I have had conversations for several years with The Reshoring Initiative. A 50-year manufacturing industry veteran and retired President of GF AgieCharmilles, Harry Moser founded the Reshoring Initiative to move lost jobs back to the U.S. For his efforts with the Reshoring Initiative, he was named to Industry Week magazine’s Manufacturing Hall of Fame in 2010..

The Reshoring Initiative’s 2018 Reshoring Report contains data on U.S. reshoring and foreign direct investment (FDI) by companies that have shifted production or sourcing from offshore to the United States. The report includes cumulative data from 2010 through 2018, as well as projections for 2019. The numbers demonstrate that reshoring and FDI are major contributing factors to the country’s rebounding manufacturing sector.

“We publish this data annually to show companies that their peers are successfully reshoring and that they should reevaluate their sourcing and siting decisions,” said Harry Moser, founder and president of the Reshoring Initiative. “With 5 million manufacturing jobs still offshore, as measured by our $800 billion/year goods trade deficit, there is potential for much more growth. We call on the administration and Congress to enact policy changes to make the United States competitive again. Our Competitiveness Toolkit is available to help quantify the impact of policy alternatives, including a stronger skilled workforce, continued corporate tax and regulatory reductions as well as a lower U.S. dollar.”

In 2018 the number of companies reporting new reshoring and foreign direct investment (FDI) was up 38% from 2017. The combined reshoring and related FDI announcements totaled over 145,000 jobs. Including upward revisions of 36,000 jobs in prior years, the total number of manufacturing jobs brought to the United States from offshore is over 757,000 since the manufacturing employment low of 2010.

Allowing for a two-year lag from announcement to hire, the cumulative announcements since 2010 have driven 31% of the total increase in U.S. manufacturing jobs during that period and 3.3% of total end-of-2018 manufacturing employment of 12.8 million.

The Reshoring Initiative largely attributes the increases to greater U.S. competitiveness due to corporate tax and regulatory cuts. Similar to the previous few years, FDI continued to exceed reshoring in terms of total jobs added, but reshoring has closed most of the gap since 2015.

Although China topped Germany for the greatest number of FDI jobs announced since 2010, China announced 12% fewer in 2018 than in 2017. I’m betting that 2019 will see a greater decline given the current trade war unless something works out.

Quality, freight cost, and total cost make up the top offshore drivers of the trend.

Proximity to market, government incentives, supply chain optimization, higher productivity, skilled workforce, and brand image/made in USA serve as the top domestic drivers.

Reshoring has been increasing at a similar rate as FDI, indicating that U.S. headquartered companies are starting to understand the U.S. production benefit that foreign companies have seen for the last few years.

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