Defining the Reshoring Discussion
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The document discusses the concept of reshoring, defined as the return of offshored manufacturing and service jobs to the United States, driven by factors such as increased overseas wages and fluctuating currency values. It outlines different types of reshoring and emphasizes the need for innovation, collaboration, and targeted public policies to strengthen U.S. manufacturing competitiveness. Policymakers are encouraged to increase R&D investments, improve broadband infrastructure, and focus on workforce development to support reshoring efforts.
Defining the Reshoring Discussion
- 1. Created by Freepik Defining the Reshoring Discussion The background and cover image used in the presentation is created by Freepik.
- 3. U.S. Manufacturing:1800s-1950s New mass-production methods developed in the late 1800s allowed American manufacturers to increase output while decreasing production costs. American manufacturers benefitted from productivity and cost competitiveness that continued through the Industrial Revolution and up to the 1950s. OUTPUT PRODUCTION COSTS
- 4. After a decade of significant offshoring in the 2000s, the cost savings that American firms had enjoyed began to erode around the year 2010. As a result of increasing costs and other factors overseas, some of the manufacturing that previously took place away from U.S. shores has already returned—and continues to return—to the United States.
- 5. SO, WHAT IS RESHORING? Reshoring is defined as previously offshored manufacturing, IT, and service jobs returning to their home soil.
- 6. The term reshoring is used to describe a range of activities that occur in numerous industries, not just manufacturing.
- 7. Types of Reshoring • In-house reshoring refers to the relocation of manufacturing activities, which were being performed in facilities owned abroad, back to facilities in the U.S. • Relocating in-house manufacturing activities, which were being performed in facilities abroad, back to U.S.-based suppliers is labeled “reshoring for outsourcing.” • When a company relocates manufacturing activities being outsourced to offshore suppliers back to its U.S.-based facilities, it is considered reshoring for insourcing. • Outsourced reshoring describes the process of relocating manufacturing activities from offshore suppliers back to U.S.-based suppliers.
- 8. RESHORING IS A RESPONSE TO MACROECONOMIC FACTORS
- 9. Factors that Impact Reshoring Decisions • “Increased wages” is the most commonly cited reason for reshoring. • Fluctuating currency values also impact reshoring decisions • Labor productivity, which is measured as the gains in output per manufacturing worker, is also commonly cited as a significant factor of total manufacturing costs. • The reduction of energy costs from 2004 to 2014, especially in energy-dependent industries such as iron and steel and chemicals industries, rendered reshoring a cheaper option for some manufacturers.
- 10. How to Encourage Reshoring Innovate • Focus should be on building the vibrancy of the critical advanced manufacturing industry sector. Deepen • U.S. must strengthen the depth of the nation’s regional advanced industry ecosystems. Collaborate • Governments, companies, and individuals to work collectively to rebuild the nation’s local skills pools, industrial innovation capacity, and supply chains.
- 11. Recommendations for Public Efforts to Encourage Reshoring • Policymakers should think of manufacturing through the lens of America’s competitiveness strategy over the long-term. • The federal government should increase investment in research and development: – science and technology help accelerate the development of useful technology and materials that support the manufacturing industry. • Provide greater investment in broadband infrastructure, which will help support the services sector by allowing companies to better meet consumer demands at a lower cost. • Increase focus on workforce development and building the nation’s talent pool through training and education.
- 12. Remember… • Not all U.S. manufacturers will find their home location a favorable place to do business • The brightest reshoring prospects involve those that can profit from the current manufacturing environment • There are opportunities for various levels of government, the private sector, and partnerships between the two to create an environment to support the manufacturers who can reshore • A company’s decision to reshore can be encouraged through the creation of favorable business conditions, a skilled workforce, and incentives that encourage innovative manufacturing practices. • Reshored jobs will likely be different from the jobs that existed before offshoring gained momentum or jobs that currently exist offshore.
- 13. Interested in learning more? Read the full report at: http://www.iedconline.org/web-pages/resources-publications/understanding- reshoring/
- 14. You can also find a wealth of additional free resources on reshoring at: http://www.iedconline.org/web-pages/resources- publications/about-reshoring-american-jobs/ The background and cover image used in the presentation is created by Freepik.