Making the Case for Reshoring
Article Revised: March 28, 2019
Reshoring is the term relating to bringing manufacturing jobs that have gone overseas back to the United States. In essence, the opposite of offshoring.
The process of bringing manufacturing jobs back to America is already underway. According to an article in a recent issue of Consumer Reports, domestic manufacturing in the United States has increased by 45% during the tenure of President Barack Obama. This metric includes both the growth of output, and also the total number of manufacturing jobs added. The aforementioned Consumer Reports issue stated that between February 2010 and May 2014, there were a total of 646,000 manufacturing jobs added in the United States. In addition, there are another 243,000 similar positions in line to be filled. This is heartening news, considering the mass exodus of manufacturing jobs overseas seen during the last 30 years. Let’s take a closer look at the case for reshoring.
Benefits to the American economy
Obviously, bringing manufacturing jobs back to the United States from overseas will benefit the American economy as it continues the recovery after the Great Recession of 2008. Re-shoring is the most efficient and expeditious way to bolster the growth of the U.S. economy due to the following factors:
- It aids in balancing the trade and budget deficits
- A reduction of income inequality
- Strengthened national security – The vast industrial capacity necessary for national defense remains strong
The benefits of re-shoring to America are pronounced and obvious. However, what is the rationale for bringing back manufacturing jobs to the United States from a business standpoint?
Reasons for re-shoring
- The numbers support the concept – It is not necessary to import a product that is manufactured in the United States. Therefore, there are no transportation costs incurred, no trade tariffs to be concerned with, and the flexibility to more readily and efficiently adapt to customer’s changing preferences. It’s much easier to alter production methods in a domestic setting, as opposed to initiating and effecting changes in overseas production methods.
- The economic factor – The strength of the American dollar vs. other foreign currencies equates to more imports — which in turn hampers re-shoring efforts. This is where the government can assist the effort by doing what it can to lower the value of the dollar. The most obvious way to accomplish this is through executing trade agreements that favor American manufacturing by lowering the value of the dollar.
- The environmental impact – Transporting goods back and forth between countries is harmful to the environment. In addition, products that are manufactured in the United States are subject to a higher level of regulation and oversight, which typically results in less pollution and a safer product in general.
The United States was the world leader in manufacturing from the time period beginning after World War II up until about 20 years ago. The reshoring iniative seeks to return America to this level through fair and equitable measures.
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