Executive Outlook 2012
EP Editorial Staff | August 16, 2012
Is manufacturing moving in the right direction? Are jobs really coming back home?
What about this “onshoring”/”reshoring” trend that’s reportedly bringing jobs back to the U.S. from foreign countries? We asked executives of several leading suppliers to industry to discuss this topic and, if they think the trend is for real, to give their opinions on how manufacturers should prepare for it with regard to training and hiring workers. We’ve shared some of their insight with you below. To read their extended thoughts, click on their names.
The return of manufacturing to our shores is something we at Motion Industries have been watching closely for several years. During the 1990s, we all saw domestic manufacturers, particularly OEMs, closing shop here in the U.S. and moving to locations outside of the country (frequently to China and India). While some of these moves certainly affected our business, most of our customers are in the “end market”—and in industries that are a bit difficult to pick up and move.
Onshoring of jobs into the U.S. is, and will continue to be, a reality—assuming we sustain a growing domestic and global demand. News of the U.S. economy actually adding man-ufacturing jobs in 2010 and 2011 (the first such growth in over a decade) indicates that offshoring has likely peaked and onshoring is taking hold.
While more and more companies are moving production back to the U.S., I see it as more of a company-specific issue, not one of general macro-economics. It’s true that the wage gap between the U.S. and other developing countries—particularly China—is getting smaller, but the quality and types of products those countries can produce are getting better.
The “offshoring” of U.S. manufacturing has been going on for years, with China being a major job destination. What’s relatively new is the increased talk about “onshoring” or “reshoring” production back to the U.S.
Most companies pay close attention to having a competitive cost structure in the manufacture of their products. Generac is no exception. Decisions are constantly being made about whether it is more cost-effective to source components from international suppliers or produce them here in the U.S.
In recent decades, the American economy has transitioned many times—from manufacturing to outsourcing, to economic crisis to a potential resurgence. But this revival is not going to happen through a simple “reshoring” of manufacturing. For the United States, a combination of factors will lead to a robust rebirth in manufacturing.
Re-industrialization is certainly a “real” trend. U.S. manufacturing has had 35 straight months of economic growth, translating to job growth: Manufacturing jobs are expected to increase 3.2% in 2012—an astounding rate compared with 1.6% overall job growth.
The geographic reallocation of global manufacturing is shifting, but the movement is in its early stages. This presents both a challenge and an opportunity for U.S. businesses. The presence of manufacturing in the U.S. has typically been seen as a core driver of the American economy and has influenced innovation, productivity and growth. Similarly, a well-trained workforce has been a keystone to manufacturing productivity. To create a healthy U.S. environment for the onshoring trend to take root, we must re-establish a commitment to technical education, the skilled trades and the individuals who do these jobs.
GE CEO & Chairman Jeff Immelt often discusses how global growth and demand from overseas customers represents a tremendous opportunity for U.S. manufacturing and innovation. (In fact, GE has already discussed its plans for creating approximately 15,000 new U.S. jobs since 2009.) I strongly echo that message.
As a global company, Gates Corporation recognizes the importance of manufacturing in local economies for local consumption, and is committed to meeting market demand—wherever it may be. Our manufacturing in the U.S. has been strong for our entire 101 years, and with over 50 years in both Canada and Mexico, our North American manufacturing continues to be the main source for our North American customer base.
Today’s global economy allows companies to design, source, manufacture and sell from an intricate web of locations based on a variety of factors, including customer sites, talent base, supply quality and availability and logistics costs. Fluke is a global corporation serving a global customer base with a global footprint. We operate every one of our facilities worldwide on the same lean manufacturing principles and to the same high standards of quality.
While there’s some evidence that offshore manufacturing is slowing and, in some cases, reversing to onshoring, in my opinion, the practice of offshoring U.S. manufacturing and service jobs will continue in the coming years.