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Reshoring’s Impact on U.S. Manufacturing

Jun 2, 2016

About 6 years ago, a trend started taking shape. Some U.S. companies started reshoring by bringing outsourced personnel and services back to the U.S.

The Bad News

Currently, more than 12 million Americans are employed in the manufacturing sector. This is down from the peak of 19.5 million in the late 1970s. Furthermore, since 1976, the U.S. has maintained a trade deficit. Then, in 1990, services surpassed manufacturing as the largest contributor to overall U.S. private industry production. And today, American exports shipped to China are approximately 20% of what Chinese manufacturers ship to the U.S., according to the Manufacturers Alliance for Productivity and Innovation.

The Efforts

During the last several years, groups such as the Reshoring Initiative offered assistance to U.S. companies looking to enhance their domestic production via education, training and awareness. 

The U.S. has acknowledged the trend of reshoring by launching the SelectUSA program, holding an Insourcing American Jobs Forum at the White House, and creating a New Manufacturing Innovation Institute Competition. 

The Good News

Successful new companies like Shinola, a manufacturer of watches and bicycles, have put U.S. manufacturing on center stage. Corporate mainstays such as GE, Apple and Caterpillar have committed to reshoring initiatives. And the real game-changer is when Wal-Mart said in 2013 that it would purchase an additional $250 billion in U.S.-made products over the next decade. 

The Results

A refocus on U.S. reshoring is paying some dividends. About 240,000 manufacturing jobs have been brought to the U.S. from offshore in the last 6 years, according to the Reshoring Initiative. And per a Boston Consulting Group survey, 17% of manufacturers are actively reshoring operations back to the U.S., up from 13% in 2013. Perhaps most significantly, in 2004 the U.S. lost 140,000 jobs to offshoring; in 2014 it had a net gain of 10,000 jobs—the first such net gain in 20 years. While the U.S. may never get back to its manufacturing levels of the 1970s, there is cause for optimism.  

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Neal Godt

Neal Godt CPA is an Audit Partner, National Commercial Services Leader, Partner-in-Charge of the SEC and New Jersey Audit practice, serving the technology, manufacturing and distribution, and software sectors, and service related companies.

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