The latest report from the Reshoring Initiative shows reshoring and FDI manufacturing job announcements continuing to outpace recent records, adding 101,500 jobs in Q1 2023, driven in large part by geopolitical tension and efforts to shore up dependence on an unreliable China. That job figure is an 11 percent increase from 2022; if the current rate continues, reshoring and FDI will total over 400,000 jobs in 2023. The report also finds that electrical equipment remains the top industry due to continuing large investments in EV batteries.
Reshoring + FDI manufacturing job announcements are continuing to outpace recent records, adding 101,500 jobs in 2023 Q1. Top takeaways:
- 2023 Q1 reshoring + FDI jobs announced are up 11% from 2022.
- If the current rate continues, reshoring and FDI will total over 400,000 jobs in 2023.
- Electrical Equipment remains the top industry due to continuing large investments in EV batteries. The industry moved from 42% of total jobs announced in 2022 to 47% in 2023 Q1.
Supply chain gaps and the need for greater self-sufficiency set the stage for the current upward trend in reshoring. The risks of a Taiwan-China conflict or China voluntarily decoupling are focusing those concerns. Destabilizing geopolitical and climate forces have brought to light US vulnerabilities and the need to address them. The White House responded with the Inflation Reduction Act, the Chips Act, and the Infrastructure Bill, offering some direction and financial security to the companies and industries intent on filling the gaps. These government actions are necessary in the short run but are not sufficient since they do not improve the uncompetitive US cost structure. A true industrial policy would level the cost playing field via comprehensive actions such as massive skilled workforce investments, a 25% lower USD and retention of immediate expensing of capital investments.
A true industrial policy would level the cost playing field via comprehensive actions such as massive skilled workforce investments, a 25% lower USD and retention of immediate expensing of capital investments.
“The current actions and momentum are a great start. A true industrial policy would accelerate the trend and increase US manufacturing by 40%, 5 million jobs. Reshoring will reduce the trade and budget deficits and make the U.S. safer, more self-reliant and resilient,” said Harry Moser, Founder and President of the Reshoring Initiative.
Reshoring continues to outpace FDI 62% to 38% – the most extreme rate in recent history – indicating that the country and domestic companies are finally recognizing the value of local production that FDI recognized a long time ago.
Due to the many federal subsidies for manufacturing of essential products, four industries now account for over 90% of jobs added . Electrical Equipment, the category in which EV batteries are recognized, is in the top place. This largely stems from dependence on China in that sector. Electric vehicles are increasingly seen as the future of the auto industry, and China currently controls the EV supply chain.
As local supply chains strengthen from the recent large investments, we expect a trickledown effect of more job creation in a broad range of industries.
The top factors that companies are reporting as reasons for reshoring highlight the concerns, priorities and benefits of returning production to the US: Eco-system synergies (i.e., healhty local supply chains), government incentives, and proximity to customers/market are cited as the top factors for reshoring in 2023. Those factors gaining momentum cover topics of efficiency, improving local supply chains, strained offshore relationships, and a consumer preference for Made in the USA.
About the Reshoring Initiative: A 55-year manufacturing industry veteran and retired President of GF Machining Solutions, Harry Moser founded the Reshoring Initiative to move lost jobs back to the U.S. He was named to the Industry Week and Association for Manufacturing Excellence (AME) Halls of Fame for his efforts with the Reshoring Initiative. Additional information on the Reshoring Initiative and its many sponsoring associations and companies is available at www.reshorenow.org.
(Photo by Mike Bird/Pexels)