As companies grow, they must seek new markets. Necessity pushes these companies to expand internationally. I was a manager in two companies that were not even large but still needed overseas markets in an attempt to survive.
On the other hand, companies begin in one home country that provides access to many things that helped them start and grow. That country has certain vested interests, too.
One of the issues Trump pressed was the feeling that companies had grown too large and too much was taken overseas. He reflected the feeling of many that the US was weakened by these companies‘ growth and subsequent expansion of manufacturing jobs overseas.
Meanwhile Harry Moser and the Reshoring Initiative has been vocal about some companies’ shortsighted financial calculations moving factories from the US to international locations.
That is some background for this press release. I sympathize with both points of view, and I’m sure the pendulum will swing and things will balance. Unless we witness another huge world war again.
Reshoring has been hot in June. The U.S. Department of Commerce’s Investment Advisory Council (IAC) reported on June 9 its recommendations, including reshoring of semiconductors and pharmaceuticals. The Reshoring Initiative’s Harry Moser teamed up with TEVA’s Terry Creighton, the driving force on the pharma recommendation, and played a leading role in expanding the focus of IAC to include reshoring in addition to foreign direct investment (FDI). At the meeting, Harry advocated for an even greater focus on reshoring and followed up with Under Secretary Farrell, offering the Reshoring Initiative’s help.
On June 8, 2021, the Biden Administration announced its immediate actions based on Executive Order 14017 “America’s Supply Chains.” The actions include major improvements in self-sufficiency in semiconductor chips, pharmaceuticals, rare earth minerals and electric vehicle (EV) batteries. These emergency actions are needed because we have allowed so many supply chain gaps to develop. The Reshoring Initiative recommends also attacking the root cause: U.S. lack of price competitiveness.
Despite the economic slowdown caused by COVID, reshoring numbers were up in 2020. Reshoring and foreign direct investment (FDI) job announcements for 2020 were 160,649, bringing the total jobs announced since 2010 to over 1 million (1,057,054). Additionally, the number of companies reporting new reshoring and FDI set a new record: 1,484 companies. All jobs added are good news, but at this rate, it will take 30 years to reach President Biden’s goal of five million jobs. Actions needed to accelerate the trend are presented in the Report.
Top Takeaways from the 2020 Report
- President Biden is prioritizing reshoring. The gaps in Biden’s plans need to be addressed in order to achieve his goal of returning 5 million more jobs. Details of needed actions are also in our Competitiveness Toolkit.
- In 2020, U.S. reshoring set a record of 109,000 jobs and outpaced FDI for the first time since 2013. COVID/supply chain uncertainty has resulted in companies emphasizing operations in their home countries.
- Recent national initiatives to shorten and close supply chain gaps for essential products aim to make the U.S. less vulnerable. The following industries are most likely to benefit: personal protective equipment (PPE), medical, semiconductor chips and defense. Medical equipment and PPE are the first responders of new reshoring and FDI, with 2020 cases up nearly 2,000% and jobs up 400% from 2019.
- There is continued growth in efforts by Manufacturing Extension Partnerships (MEPs), economic development organizations (EDOs) and states to enable reshoring. The Reshoring Initiative is deeply involved in these efforts with its Import Substitution Program (ISP). As a measure of corporate interest, the demand for this service is more than ten times the rate of 2019.
- We anticipate 2021 reshoring and FDI job announcements to be near 200,000, up by at least 25% from 2020.
See the full report: Reshoring Initiative® 2020 Data Report: COVID Drives Cumulative Jobs Announced Past 1 Million