Global Finance: US Manufacturing – The Reshoring Is Real, The Jobs Are Not

Companies are relocating production to the developed nations like the United States, but hiring fewer workers. One case study suggests that a single US worker combined with investment in automation can replace seven Chinese workers. The trend has been in place for several years in both the United States and Europe. Craig Mellow, writing for Global Finance, points to four reasons: Labor costs are increasing in China and other developing nations, global management is costly and challenging, reliance on automation and low energy costs in the United States. Low labor costs are no longer the leading factor for locating a production facility. “A similar dynamic is seen in service industries, where wages are rising in offshore magnets like India and Eastern Europe, while software advances render obsolete many low-skilled jobs in data entry or customer service,” reports Mellow. Analysts suggest that “Apparel and other lightweight, handwork-intensive goods will keep chasing cheaper workers …. The sweet spot for reshoring is in autos and other weighty machines.” The US workforce is not trained or ready for reshoring, and some companies may experiment with nearshoring. All countries must prepare for decreasing numbers of jobs. – YaleGlobal