THE TOTAL COST OF FINISHED GOODS
Apple, Google, Samsung, Intel and Lenovo: These are just a few of the high-tech companies that together have brought back 50,000 manufacturing jobs to the U.S. in the past three years from countries such as China, India and the Philippines and from infamous factories such as Foxconn, according to the Reshoring Initiative. But that's a drop in the bucket compared with the 6 million U.S. jobs that have been lost between 2000 and 2009, according to the Bureau of Labor Statistics.
"Last time I looked, the unemployment level was still sky-high," said one government-focused solution provider who preferred not to be identified. "I hear a lot about reshoring, but where are the jobs?"
Experts, however, say the reshoring trend is real but acknowledge it is ramping up slowly.
"It's a lot more than a press release for these companies," said Harry Moser, who founded the Reshoring Initiative in 2010 and is its president. The initiative's goal is to outline the profit potential as well as the role manufacturers could play in bolstering the U.S. economy by bringing jobs back to the U.S.
Moser said reshoring isn't a decision driven by nostalgia or flag-waving -- it's one that simply makes business sense.
"After years of chasing low wages across the globe, more companies are waking up and thinking about the total cost of finished goods," Moser said. He said companies that offshore manufacturing haven't really done the math.
Average crude oil prices have jumped 266 percent since 2003, making cargo-ship fuel much higher. A natural-gas boom has lowered fuel costs for running energy-greedy factories. Average wages in offshoring hot spots such as China have increased in some cases five-fold since 2000 and are predicted to creep up an estimated 15 percent to 20 percent in the coming years, according to a TD Bank Group report on reshoring. At the same time, U.S. wage increases have remained flat.
Over the past years, meanwhile, U.S. labor productivity levels have shot up as overseas productivity levels have fallen at some overseas manufacturing plants. But not only are U.S. workers more productive, U.S. workers are more skilled, on average, than their Chinese counterparts, according to a report from The Boston Consulting Group.
While manufacturing represents less than 12 percent of U.S. gross domestic product and only 10 percent of national employment, reshoring for the IT industry and channel is having a disproportionately positive impact, Moser said.
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