You’ve heard of “off-shoring.” And depending on your age, “Pauly Shoring.”
But the buzz word for the next few years could be “re-shoring,” or the return of manufacturing jobs to the United States that were previously shipped overseas.
According to an investment analysis from Charles Schwab, declining American energy prices are helping narrow the production efficiency gap between the United States and China – making it more cost-effective for corporations to manufacture goods stateside.
“If ‘offshoring’ was a business buzz word of the nineties and the aughts, then ‘reshoring’ is this decade’s replacement,” the analysis states. “Companies that were initially lured by lower costs overseas are now bringing production back home.”
Schwab’s analysis quotes a 2012 study by The Hackett Group which reveals it is currently 30 percent less expensive to produce goods in China – down from 51 percent less expensive in 2005.
That trend line is expected to continue moving in America’s direction so long as U.S. manufacturers are able to reap the benefits of declining energy costs (thank you, “fracking”) – and as long as Chinese labor costs continue to climb.
4 comments
The Motch brothers tried to sell “inshoring” to Marty Huggins, but he flatly rejected the idea as bad for the citizens of Hammond.
We are going to see more on-shoring over the next few years than you can imagine. Lower energy prices coupled with advances in automation are driving the issue. Companies are tired of dealing with the low quality delivered by the Chinese and delays in shipping.
One thing to keep in mind though. When textile company “A” went off shore 20 years ago it took 500 jobs with it. When they come back they will only bring 125 with them. The rest will be lost to technology (robots mostly).
As long as a billion Indians and a billion Chinese are competing for technical jobs, H1 visas will make shore we won’t see any change.
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The job you create may be YOUR OWN!!!
YOU BETCHA!