February 20, 2013

Bringing factory jobs back to the U.S.

Manufacturers seeking a rebirth at home look to Washington to help speed the process.

By Jeffry Bartash / MarketWatch

 

GM Plant in Kansas City, KS
click image to enlarge

General Motors employees in Kansas City, Kan., listen to GM CEO Dan Akerson announce a $600 million investment in the plant Jan. 28. Anecdotal evidence suggests manufacturing employment is getting a boost from “in-shoring.”

David Eulitt/Kansas City Star/MCT

President Obama loves to talk about bringing manufacturing jobs back home, but the number of companies that are "in-shoring" or "re-shoring" is hardly more than a trickle.

Yet optimism is growing that the nation is on the verge of a manufacturing renaissance. The U.S. has become a more competitive place to do business and a number of blue-chip companies such as Apple, Google, General Electric and Ford Motor Co. are expanding operations at home.

Both political parties, what's more, are keen to help speed up the trend.

In his State of the Union address last week, Obama pushed for closer business-government ties to create high-tech jobs and to provide more technical training for students. Once again, he expressed interest in tax reform that could lower corporate rates – an idea that's top on the list of Republican and business leaders.

"Our first priority is making America a magnet for new jobs and manufacturing," Obama declared.

On that, everyone in Washington agrees. Now the question is whether both parties can really step up to the plate. So far, the nation's lawmakers have largely been AWOL.

U.S. manufacturers have enjoyed a bounce since the end of the recession, adding nearly a half-million jobs. The industry now employs almost 12 million workers and is growing employment for the first time since the mid-1990s.

Yet those gains pale in comparison to the nearly 6 million U.S. jobs that vanished from 2000 to 2010, when manufacturing employment shrank to 11.4 million from 17.3 million. Many of those jobs ended up in China or other low-cost countries.

Can some or all of those jobs come back? Right now the evidence is thin. Most manufacturing jobs created in the past three years are the result of a recovering economy. Companies that slashed payrolls in the Great Recession have been beefing up to handle rising demand.

Take carmakers and parts dealers. They've hired 125,000 workers since the end of the recession, accounting for a quarter of all new manufacturing jobs, according to Labor Department data.

The companies have padded payrolls to meet a 39 percent jump in sales since the industry bottomed out in 2009. The number of vehicles sold climbed to 14.5 million in 2012 after hitting a decades-low of 10.4 million four years ago.

At the same time, though, reams of anecdotal evidence suggest employment in the manufacturing sector is getting a boost from U.S. companies returning operations back home. And foreign firms increasingly see America as a good place to establish deeper roots.

The hard proof, however, is lacking. No one is quite sure if the U.S. is reaping a net benefit once all the manufacturing jobs entering and leaving the country are added up.

"Unfortunately, there's not a lot of hard numbers," said chief economist Chad Moutray of the National Association of Manufacturers. "There just isn't a lot of data."

The best source on employment trends might be the Reshoring Initiative, an organization that encourages U.S. businesses to return manufacturing back home. Harry Moser, founder and president, estimates some 50,000 manufacturing jobs have returned to the U.S. in the last three years.

If so, that would account for a solid 10 percent of the manufacturing jobs created since 2010.

Moser came up with the estimate by tallying the numbers from actual news reports of companies returning jobs to America and extrapolating from the data. Yet he acknowledges he doesn't know how many jobs have left the U.S. during the same span.

"Off-shoring has continued," he said. "It's still happening."

So what's it going to take to turn the trickle of in-shoring into a flood?

(Continued on page 2)

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