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From Reshoring to Amerishoring
Domestic and Foreign Investments in U.S. Manufacturing Are Growing
Amerishoring: [uh-mer-i-Shor-iNG]: the act of starting or expanding manufacturing operations in the United States, either by a domestic U.S. company or a foreign company (foreign direct investment), or of returning production to the United States by a domestic manufacturer that had previously offshored its production to a foreign land.
American manufacturing—and the jobs that it generates—is getting a boost on more than one front.
Today, more manufacturing work is coming to the U.S. than leaving the country, according to the Reshoring Initiative. The reason? There are at least three: a strong combination of reshoring (the return of previously offshored manufacturing work by U.S. companies), foreign direct investment (FDI) in the U.S. manufacturing sector, and domestic investments by U.S. companies that are either starting up new operations or expanding existing U.S. operations.
Reshoring remains steady, having added about 67,000 new jobs to the U.S. manufacturing sector in 2015, according to the Reshoring Initiative. Over the last six years, it’s been responsible for generating just under a quarter of a million U.S. manufacturing jobs. Considering the millions of American jobs lost through offshoring in the years leading up to 2010, it’s an excellent trend.
Some OEMs, such as Ford, Caterpillar, GE, and General Motors, are increasingly looking to domestic suppliers, rather than overseas, to make parts for their products. Factors like closer proximity, shorter lead times, better quality, and easier access to technology innovation are often cited as reasons for reshoring.
But reshoring, it appears, isn’t going to be left alone to do all the heavy lifting needed to build the type of stronger, more adaptive, and technology-based manufacturing sector that will be needed to successfully answer the market demand pressures coming out of industries such as aerospace and automotive.
Many U.S. companies, large and small, are making investments in domestic manufacturing as they start up new operations in the states, rather than overseas, or expand existing manufacturing operations. These companies aren’t just large OEMs and product manufacturing companies. They also include small startups that make finished products, and they include contract manufacturing companies and suppliers, ranging from injection molding companies to metal fabricators, that are expanding to meet increasing demand.
Many foreign companies, too, are investing in what they see as a promising U.S. market. Some already have plants here and, like domestic companies, are expanding to meet growing demand. Others see the U.S. as a growing market for the increasingly high-tech automotive industry and are making sure they’re positioned close to where they want to sell their products. Suffice to say that America’s reputation for innovation is a strong draw, especially as companies seek to exploit rapidly growing sectors, like the Internet of Things (IoT), or the convergence of industries such as electronics and automotive.
A report released in June by the U.S. Department of Commerce confirmed just how much of an impact that foreign direct investment in the United States is making. The report, titled “Foreign Direct Investment in the United States: Update to 2013 Report,” stated that total FDI is growing at an average of 6 percent per year, and that the U.S. is the “largest recipient of global FDI, with an inward FDI stock of $2.9 trillion on a historical-cost basis in 2014.” Manufacturing alone accounted for 36 percent of that FDI stock, a total of $1.05 trillion on a historical-cost basis.
But now is not the time to relax and rest on our laurels.
John Ratzenberger, an advocate for U.S. manufacturing, likes to say that “manufacturing is to America what spinach is to Popeye.” He cautions that company leaders, whether they’re CEOs of large manufacturing companies or smaller firms, need to be aware that that their decisions to make products overseas have long-lasting economic impacts throughout their communities. When a company goes offshore, its decision affects not just its own employees, but also workers at local businesses—restaurants, tire shops, and barber shops—that used to service the employees of that factory.
“Everybody starts boarding up their stores because you decided you wanted to make a T Shirt that was $3 cheaper, but the effect on the community actually makes it much more expensive,” Ratzenberger said. So it’s time to appreciate the advantages of U.S. manufacturing, particularly quality.
“We’re Americans, and we have pride in our work, pride in what we do. Manufacturing is the backbone of our nation, and if you let that go, then all the rest of it crumbles,” he told Design-2-Part Magazine in an interview. “Whether you’re a CEO of a big company or a small company, people need to understand that. If you’re going to be making all of your stuff overseas, then you’re responsible for removing a piece of the spine of America.”
“I don’t think that there’s any question that American labor is the finest labor in the world,” said Elio Motors Vice President Jerome Vassallo during an interview in June. “When it’s stamped ‘Made in America,’ there’s a lot of pride that goes along with that.”
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