1st half 2023 Reshoring – foreign direct investment (FDI) job announcements continued their record-breaking run in America. 1H 2023 announcements were in line with 2022’s record rate. We expect to see upwards of 300,000 jobs announced by year-end. EV battery and chip investments along with other essential product industries supported by Bidenomics account for the bulk of the announcements.
By Reshoring Initiative 1H 2023 Report
When it comes to U.S.-China trade, the U.S. objective should be: stay bigger than China. It’s too difficult and confrontational to depend on directly limiting China’s growth. Growing the U.S. economy and manufacturing sector is a better strategy.
On Harry Moser’s new podcast, Lew and Harry welcome Harold Schoch, CEO of Fives Machining Systems Inc. and Matt Shockey, President of the Grinding Ultra Precision business line of the Fives Group. They discuss the skilled trades gap, supply chain challenges, the importance of reshoring, and more.
Reshoring Initiatives Harry Moser’s commentary on why factories are returning to the U.S. is featured in this CNBC documentary.
Why Factories Are Coming Back to the U.S.
A factory construction boom fueled by reshoring is surging in the U.S. The growth is being driven by a U.S. policy push to boost domestic clean-energy manufacturing, by global supply chain risk, and by the total cost of ownership (TCO) equation. Almost 60 percent of the spending is attributed to construction for chips, EV batteries and other electronic manufacturing.
Reshoring Fuels U.S. Factory Construction Boom – Harry Moser
Published: Assembly Magazine
Harry Moser has been around the manufacturing business long enough to watch an idea he once pioneered — reshoring — go from a fringe concept to an almost universally accepted article of faith in the industry.
All it took was a global pandemic to make it happen….
Harry Moser’s new article discusses the paradigm shift of manufacturing from global to local. The geographic distribution of global suppliers will fundamentally shift from being mostly global to mostly local by 2026.
Reshoring Confirmed: Paradigm Shift from Global to Local
America is Back.
I founded the Reshoring Initiative in 2010 after witnessing an acceleration of U.S. manufacturing offshoring. As EPI News reported in January 2011, “In a year when fewer than one million domestic jobs were created, International Economist Robert Scott calculates that the growth in the U.S. trade deficit in 2010 created 1.4 million jobs overseas in 2010 and that many of those jobs were outsourced by American companies.”
Harvard Business School professors Gary Pisano and Willy C. Shih wrote in 2009 that the United States had been ceding the country’s industrial commons—“that is, the collective operational capabilities that underpin new product and process development in the U.S. industrial sector.” Being the foundation for innovation and competitiveness, they are not only “embedded in firms and scientific institutions, but also geographically rooted.” I agree.
Companies began to appreciate the benefits of local manufacturing and the reshoring trend grew steadily from 2010-2019 but developments in the 2020-2023 era shifted reshoring into hyperdrive.
Reshoring in the 2010-2019 era
From 2010 through 2019, companies decided to reshore mainly due to the irritation of many small costs and delays, including quality issues. We urged companies to more accurately assess their total cost of offshoring and shift their collective thinking from ‘offshoring is cheaper’ to ‘local reduces the total cost of ownership.’
The Reshoring Initiative developed and continues to offer The Total Cost of Ownership (TCO) Estimator®, a free online tool that helps companies account for all relevant factors — overhead, balance sheet, risks, corporate strategy, and other external and internal business considerations — to compare the true cost of sourcing, domestic vs. offshoring. By using this tool for sourcing or selling, most companies will find they or their customers can bring back 20 to 30% of what they are now importing.
The new normal
Economics expert Rana Foroohar commented in Yahoo! Finance on disruptions, “Supply chain interruptions are now happening every 18 months to three years. So, this is not a black swan event. This is something that for a variety of reasons is becoming the new normal.”
The pandemic caused 80% of global sectors to incur supply chain disruptions, compelling over 75% to widen the scope of their existing reshoring plans.
Shifting into hyperdrive — the 2020-2023 era
Developments in the 2020-2023 era led to reshoring operating at warp speed. A recent survey conducted by Xometry, Forbes, and John Zogby Strategies, found that 48% of CEOs reshored all or some of their facilities (2023 Q2), a dramatic jump in three months from 35% (2023 Q1).
Over the past four decades, there has been persistent underinvestment in U.S. manufacturing. In stark contrast, manufacturing investment is now surging. New investments in U.S. manufacturing by domestic and foreign companies shifted into hyperdrive after President Biden’s Inflation Reduction Act (IRA), Act, and the Bipartisan Infrastructure Bill were enacted.
Reshoring + FDI manufacturing job announcements in 2022 were at the highest rate ever recorded, with a total of 360,000+ jobs, a 53% increase from the 2021 record high. Reshoring + FDI manufacturing job announcements continued to outpace recent records, adding 101,500 jobs in 2023 Q1. If the current rate continues new job announcements will reach over 400,000 by year-end. Additionally, the cumulative number of jobs brought back since the manufacturing low in 2010 will reach two million — about 40% of the five to six million lost to offshoring.
Developing a local supplier ecosystem
DEMA Engineering Company has reshored 20% of their work from Taiwan and China to the U.S. Jonathan Deutsch, president of DEMA says, “Everything shifted suddenly and almost entirely in 2020. The biggest problem for us, as for so many, was the cost of freight, which had skyrocketed overnight. We went from a 40-foot shipping container costing $3,500 to costing over $28,000.”
Deutsch adds that between the sky-high freight costs, port strikes, labor shortages, and unreliable deliveries, “it was no longer workable and was imposing extremely challenging and unpredictable circumstances on our business. Add the price increases worldwide, geo-political challenges, tariffs — the uncertainty became too much. This is what pushed us to start to imagine a change.”
DEMA is currently developing a local supply chain network and continuing to reshore more work. “Especially for new projects, we are bringing the tools themselves that make the parts back onshore, and then we can start making the parts here, in Missouri or in Pennsylvania. For the last three big projects we’ve done, we’ve been able to onshore most of the parts,” Deutsch concludes.
Are you thinking about reshoring?
For help, contact me at 847-867-1144 or email me at harry.moser@reshorenow.org. Our main mission is to get companies to do the math correctly using our free online Total Cost of Ownership Estimator (TCO). By using TCO, companies can better evaluate sourcing, identify alternatives, and even make a case when selling against offshore competitors.
Why Reshoring Shifted Into Hyperdrive
The Case for Returning U.S. Manufacturing from China
By Harry Moser (Reshoring Initiative) and Daniel O’Hara – Real Clear Policy 9-14-23
Harry Moser writes, over the past 40 years, demand for cheaper goods pushed American factories and sourcing offshore to China. Now that China has positioned itself as a challenger to U.S. global leadership, the relationship has changed and the geopolitical risk of manufacturing or sourcing in China has grown.
“The Case for Returning U.S. Manufacturing from China”
Read the full story here
A factory construction boom is sweeping the U.S. Mega-billions are pouring into gigafactories to produce battery cells, components, materials and semiconductors. Experts believe we are in the early days of a U.S. manufacturing supercycle.
-by Harry Moser, Reshoring Initiative.
Courtesy of the US Treasury
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August 16, 2023
NORTH HORNELL, NY – Officials say that a bicycle rider was struck by a semi this morning in the North Hornell area on Route 36.
Waiting on details from North Hornell Fire Department.
North Hornell Fire Chief Mike Robbins says the bicyclist survived, with only minor injuries, and was taken to St. James Hospital.
