EuroWire September 2019

Transatlantic Cable

The Reshoring Initiative also believes the trend is driven by improved US competitiveness as a result of cuts to corporate taxes and fewer regulations. The report tracks both negative and positive factors that influence reshoring and FDI. The top negative issues experienced offshore include manufacturing quality, freight costs, total cost, inventory, rising wages, the risk of supply chain interruption due to natural disaster or political instability, intellectual property risk, communications, and even ecological considerations. The top positive factors favouring domestic production include government incentives, proximity to market, availability of a skilled workforce or training opportunities, the image of “Made in the USA”, impact on the domestic economy, lead time to market, and infrastructure. Reshoring and FDI activity is spread across a wide range of industries. A large portion, 32 per cent, is due to investments in domestic automotive assembly plants and parts suppliers, a trend that is continuing in 2019. Toyota announced on 14 th March that it will invest $13 billion in its US operations and add 600 manufacturing jobs in the country by 2021. Manufacturing of large, heavy products such as appliances and machinery is also being reshored. Increased domestic production of natural gas is driving investment in the chemicals industry in the USA. Reshored fromwhere? From 2010 to 2018, 72 per cent of reshored jobs came from Asia, mostly from China. During that same period, 21 per cent came from North America (Mexico and Canada). Investments from Asia were responsible for generating 46 per cent of FDI jobs from 2010 to 2018, more jobs than any other region. Additionally, 40 per cent of FDI jobs were driven by funds from western Europe. By country, China was responsible for 19 per cent of FDI jobs, followed by Germany at 18 per cent and Japan at 15 per cent.

Manufacturing

After decades of shedding employment, the US manufacturing sector is finally adding jobs again

An article from Eric Olson appeared on Engineering360 in late May, asking: “Why have hundreds of thousands of manufacturing jobs returned to the US from overseas?” The sector is benefitting from a combination of two factors: domestic companies moving production from offshore back to the USA, and foreign companies investing in manufacturing operations in the USA, resulting in 145,000 new US manufacturing jobs during 2018. Since 2010, 757,000 jobs have been added, representing 31 per cent of total US manufacturing job additions since manufacturing employment hit a low of 11.45 million, following the Great Recession in February 2010. The figures are based on data collected by the Reshoring Initiative, a non-profit organisation that promotes reshoring investment in the USA. The data comes from the organisation’s reshoring library, a collection of over 5,800 articles published by business news outlets, privately submitted reshoring case studies, and other privately documented cases. The institute tracks job numbers by assigning them to the year in which the numbers were first announced. The organisation estimates that, on average, actual hirings occur 12 to 24 months after announcement. The drive behind the change The Reshoring Initiative points to a number of motivating factors behind reshoring and foreign direct investment (FDI). The impetus to reshore comes as companies increasingly recognise the total costs associated with producing goods overseas. Businesses can achieve financial advantages by locating production close to customers.

Image: www.bigstockphoto.com Photographer Adrian Grosu

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September 2019