Why do some companies return jobs to the United States from overseas?
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AUSTIN, Texas — By now, we've all heard about – and likely dealt with – supply chain shortages. And, according to Poynter, a new wave of interruptions could be unfolding this week. Show
Citing CNN, Poynter reported that China has a strict zero-COVID-19 policy that responds to new COVID-19 cases. It includes lockdowns of millions of people and factory shutdowns, among other things. In response to growing case numbers, China's government is reportedly forbidding 24 million people living in the province of Jilin from leaving. Poynter reports that the lockdown will also apply to Shenzhen (17.5 million people) and Dongguan (10 million people). In all, 54 million people in China will be in lockdowns by the middle of this week. Poynter said that the lockdowns will stop the production of "everything from Toyota cars to Apple iPhones." Related Articles
But other news platforms are pointing out that the delays from suppliers overseas are benefiting some U.S. manufacturers. Fox Business reported that some American factories are calling production back to the U.S. Poynter said the word that is catching on is "reshoring," which means bringing foreign jobs back to the U.S. to avoid shipping interruptions. Data from a group called the Reshoring Initiative shows that an estimated 220,000 jobs were projected to come back to the U.S. last year. Some of those jobs were here in Central Texas. The Reshoring Initiative has a list of hundreds of companies that moved jobs from abroad, through either reshoring or foreign direct investment (FDI) job announcements. The list was last updated in January 2021 and includes: American companies are on pace to reshore, or return to the U.S., nearly 350,000 jobs this year, according to a report published Friday by the Reshoring Initiative. That would be the highest number on record since the group began tracking the data in 2010. The Reshoring Initiative lobbies for bringing manufacturing jobs back to the U.S. The loss of American manufacturing jobs to foreign labor has been a central theme of several presidential candidates’ campaigns. However, the trend of offshoring may be slowing, according to one organization. According to non-profit advocacy group the Reshoring Initiative, offshoring resulted in a net loss of approximately 220,000 manufacturing jobs from 2000 to 2003. However, according to the group, the country added roughly as many jobs due to foreign investment and reshoring as it lost to offshoring last year. Some of the largest U.S.-based companies, likely for both public relations and practical reasons, have begun building factories domestically for operations that would likely have gone overseas a few years ago. Offshoring, or shifting production from U.S. plants to foreign facilities, is a relatively recent phenomenon that has taken a considerable toll on the U.S. economy. In an interview with 24/7 Wall St., Harry Moser, founder and president of the Reshoring Initiative, explained that recent developments have made the prospect of manufacturing domestically much more feasible. Moser cited economic troubles and rising wages in China as one of the primary drivers of this recent trend. Manufacturers Bringing The Most Jobs Back to America Indeed, lower labor costs and fewer regulations in countries such as China have created an incentive for U.S. companies to relocate production there. Consequently, U.S. manufacturing has taken a major hit. A study by the Economic Policy Institute found that the U.S. lost roughly 2.4 million manufacturing jobs to China alone from 2001 to 2013. However, the same market forces that have pushed American jobs overseas are now bringing some of those jobs back. Recently, labor costs in places such as China have been rising, and when paired with high international shipping costs, offshore production presents less of a discount than it once did. Recently, General Electric shifted production of a water heater from China to a plant in Louisville, Kentucky. The move brought hundreds of manufacturing and engineering jobs back to the U.S. While the reshoring phenomenon is primarily a byproduct of expensive labor abroad and high shipping costs, bringing manufacturing jobs back to the United States is often beneficial to a company’s image. For example, Walmart contracted General Electric to manufacture high efficiency light bulbs in its plants in Ohio and Illinois as a part of Walmart’s brand-boosting Made in USA initiative. Similarly, Farouk Systems, Inc. cites image as a primary reason for reshoring jobs. Along with Walmart and General Electric, Farouk Systems ranks among the companies bringing the most jobs back from overseas. A variety of other logistical factors are also making reshoring more practical for businesses. In the era of Amazon, in which consumers expect quick turnaround on products, it can be more practical for companies to manufacture products in-country to have the product ready for customers faster and avoid shipping expenses. 9 Most Counterfeited Products in America The extent to which these factory openings are truly a sign of an American manufacturing renaissance or merely a pause from the ongoing departure of the industry from U.S. shores is still unclear. One certainty is that it will take more than a few thousand jobs to reverse the trend of decades of offshoring and heavy reliance on foreign imports. The roughly 22,000 jobs these companies have brought back to the country over the last five years is not insignificant, but it is a drop in the bucket compared to those they have sent abroad. According to one EPI estimate, Walmart alone was directly responsible for the loss of 200,000 American manufacturing jobs due to it’s Chinese offshoring. It is perhaps much easier to make the argument that the service sector is experiencing a true revival. While several years ago it was common practice for American companies to offshore customer support call center jobs, many American companies and customer service contractors are adding or plan to add jobs in the U.S. As of last year, there were roughly five million Americans employed in some 66,000 call centers across the country. The Reshoring Initiative provided 24/7 Wall St. with estimates for the U.S. based companies that have reshored the most manufacturing jobs in the past five years. These reshoring estimates are based on company announcements to move international manufacturing operations to the U.S. These are the manufacturers bringing the most jobs back to America. 1. Walmart > Total jobs reshored: 4,838 Walmart, the world’s largest company, announced in early 2013 a “Made in USA” program in which it pledged to purchase $250 billion of American-made products for its stores by 2023. Reshoring Initiative estimates that the company’s investments will add several thousand jobs in the coming years, and that the investment could indirectly result in thousands more. Of course, the company is perhaps one of the biggest single importers of foreign goods into the United States. By one estimate, Walmart’s Chinese imports alone displaced close to 200,000 American jobs. 2. Ford > Total jobs reshored: 3,200 According to the Reshoring Initiative, Ford is bringing more jobs back to America than any U.S. company other than Walmart. Last year, Ford moved manufacturing of its F-650 and F-750 trucks from Mexico to a production plant in Avon Lake, Ohio. Additionally, in the spring of last year, the company announced it would shift production of its 2.0 and 2.3 litre Ecoboost engine from Valencia, Spain to Cleveland, Ohio. Ford implemented the manufacturing moves to reduce shipping costs and improve manufacturing quality. The company will also receive millions of dollars in state tax breaks for bringing jobs to the Buckeye State. 3. Boeing > Total jobs reshored: 2,700 Boeing announced in the fall of 2014 it would transition several hundred manufacturing jobs from overseas to its plant in St. Louis, Missouri. The reshored jobs will primarily be parts manufacturing for the company’s 777 series passenger jets. The restructuring will mean more jobs in the company’s St. Louis plant, which currently serves as the headquarters for Boeing’s Defense, Space and Security division. The division already employs some 14,500 local workers. The shift will also support new jobs at Boeing’s assembly plant in Puget Sound, Washington, where final assembly of the aircraft takes place. The change is scheduled to be implemented by 2017. MORE:See the rest of the top manufacturers bringing jobs back 24/7 Wall St. is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY. What are advantages of bringing jobs back to the U.S. for the manufacturer?GREATER EFFICIENCY AND SAFETY
Because of the higher standards and quality, American manufacturing naturally creates fewer risks for your business, in financial, safety, regulatory and environmental terms. Foreign-made products can have an increased risk of malfunction, which can end up costing you more in the long run.
Why are some companies bringing production back to the U.S. or at least considering it )?Higher product quality and consistency
“Sourcing or producing locally helps to reduce product quality risks and increase flexibility in customer responsiveness.”
Which is a result of outsourcing jobs from the United States to other countries?Job outsourcing helps U.S. companies be more competitive in the global marketplace. It allows them to sell to foreign markets with overseas branches. They keep labor costs low by hiring in emerging markets with lower standards of living. That lowers prices on the goods they ship back to the United States.
Which manufacturers are bringing the most jobs back to America?General Motors, Intel and US Steel are among companies opening new factories in America. Companies started reviewing their supply chains following the US-China trade war and pandemic.
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