Reshoring Rides the EV Battery Wave, Taking Aim for Another All-Time High
Reshoring + FDI manufacturing job announcements are continuing to outpace recent records, adding 101,500 jobs in 2023 Q1. If the current rate continues new job announcements will reach over 400,000 by year-end. Additionally, the cumulative number of jobs brought back since the manufacturing low in 2010 will reach two million - about 40% of what we lost to offshoring.
Distribution of Jobs
Reshoring continues to outpace FDI 62% to 38% - the most extreme rate in recent history - indicating that the country and domestic companies are finally recognizing the value of local production that FDI recognized a long time ago.
Reshoring Initiative 2022 Data Report
Currently, most reshoring is from cases of “automatic reshoring” - new investments and production that offset extreme rates of imports. In these cases, Country From is not often reported. Of FDI and reshoring where Country From is reported, Q1 data shows the most jobs coming back from Germany, China, Korea and Japan.
Due to the many federal subsidies for manufacturing of essential products, four industries now account for over 90% of jobs added. Electrical Equipment is in the top place because EV batteries are categorized by NAICS code in that industry. The lack of focus on manufacturing over the past 40 years got the U.S. so dependent on imports that it needed $100’s billion in government incentives to start the recovery. It is imperative that the manufacturing industrial base maintain a strong recovery to return the U.S. to a safer and more self-sufficient state.
Supply chain gaps and the need for greater self-sufficiency set the stage for the current upward trend in reshoring. The risks of a Taiwan-China conflict or China voluntarily decoupling are focusing those concerns. Destabilizing geopolitical and climate forces have brought to light our vulnerabilities and the need to address them. The White House responded with the Inflation Reduction Act, Chips Act, and Infrastructure Bill, offering some direction and financial security to the companies and industries intent on filling the gaps. These government actions are necessary in the short run but are not sufficient since they do not improve the U.S.’ uncompetitive cost structure. A true industrial policy is the best option to protect the U.S. from the increasing risks associated with geopolitical volatility. It should focus on leveling the cost playing field via comprehensive actions such as massive skilled workforce investments, a 25% lower USD and retention of immediate expensing of capital investments.
Reshoring Initiative reporting contains data1 and analysis on trends in U.S. reshoring announcements by U.S. headquartered companies and FDI by foreign companies that are shifting production or sourcing from offshore to the U.S. This Report should motivate companies to further reevaluate their sourcing and siting decisions by considering all the cost, risk and strategic impacts flowing from those decisions. Reshoring’s success has occurred despite uncompetitive U.S. manufacturing costs. Presently, shifting forces are creating more incentives and opportunities for companies to produce at home. The Reshoring Initiative can help government policymakers project the impact of applying industrial policy to bring millions more jobs back. Acceleration of the trend depends on the government leveling the playing field, making the United States more price competitive.
22/05/2023Enquire about this StoryReturn to News Overviews