NEWS\\\


effect, Anderson states that she’s witnessed a number of


companies who poorly


Issue 5 2017 - FBJNA


9


Near-Shoring, Reshoring Trends Up


finds that 2016 achieved a net gain of 27,000. The numbers


demonstrate


For the first time in decades, more manufacturing jobs are returning to the United States than are going offshore, finds the Reshoring Initiative’s 2016 Reshoring Data Book. It states that the combined reshoring and foreign direct investment (FDI) trends grew by over 10% in 2016, adding 77,000 jobs (tying the 2014 record) and exceeding the rate of offshoring by about 27,000 jobs. The 2016 results bring the total number of manufacturing jobs brought back from offshore to more than 338,000 since the manufacturing employment low of February 2010.


According to a new study


by Lisa Anderson MBA, CSCP, president of LMA Consulting Group, 70% of US manufacturing executives expect near-shoring to increase within the next five years. Anderson refers to the trend for near-sourcing as the “Amazon” effect -- the need for rapid response to customer needs. “The industry was already


moving in that direction prior to the US presidential election,” she says. “However, since tariffs are likely to increase and bad publicity could easily occur, the impact will probably steer some of those companies


towards the US instead of Mexico. “I’ve seen that manufacturers


were already considering insourcing to the U.S. and near- sourcing options to Mexico and other closely located countries because of the Amazon effect – the need for rapid response to customer needs. Thus, the industry was already moving in that direction prior to the U.S. presidential election. However, since tariffs are likely to increase and bad publicity could easily occur, the impact will probably steer some of those companies towards the U.S. instead of Mexico. In addition to the Amazon


planned their outsourcing and off-shoring efforts. “They now have experience and data to make


better decisions,” she


says. “Since the total cost of importing products


from


non-commodity Asia


is


equalizing with what can be achieved in the U.S. or Mexico, near-sourcing becomes a no- brainer when the customer and cash impacts are added to the cost equation. It is also far easier and more successful to communicate and manage when manufacturing is closer to the markets served.” In comparison to 2000-


2003, when the US lost, net, about 220,000 manufacturing jobs per year to offshoring, the Reshoring Data Book


that reshoring and FDI are important contributing factors to the country’s


rebounding


manufacturing sector. The Data Book finds that the


overall trend was up from 2015 due to anticipation of potential policy changes to make the US more competitive, continued rising wages overseas, and increased use of total cost of ownership for sourcing decisions. “With 3 to 4 million


manufacturing jobs still offshore, as measured by our $500 billion/year trade deficit, there is potential for much more growth,” said Harry Moser, founder and president of the Reshoring Initiative. Diving deep into reshoring


reshoring with


data, the group finds: proximity to customers was the leading factor in 2016, followed by government incentives, skilled workforce availability and ecosystem synergies; the Southeast and Texas remain the top regions for reshoring and FDI, with the Midwest in second place due to its strong industrial base; transportation equipment remained the strongest industry, accounting for nearly 40% of total jobs returned;


plastics/rubber


and furniture saw the largest increases in industry ranking; FDI has remained stronger than


both


trends based on the logic of producing in the local market, otherwise known as localization; preliminary 2017 data trends are looking to be at least as good as 2016.


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