16. May 2013
Is reshoring fact or fiction? Morgan Stanley thinks the latter, so stipulated in a 125-page report titled U.S. Manufacturing Renaissance: Is It A Masterpiece Or A Fake? Basically the global financial firm says there is no data supporting claims that manufacturing is coming back to the U.S., calling any stories that suggest otherwise anecdotal.
But Harry Moser of the Reshoring Initiative is undaunted. Offshoring is indeed still occurring, the former machine tool executive agrees, but according to his group’s numbers, some 50,000 manufacturing jobs had been reshored in the time period from January 2010 through about July 2012, representing about 10% of manufacturing’s overall job growth. “The annual amounts are not large enough to be visible in national data.” Moser states. “The rate is still absolutely moderate, probably about as large as large as the annual incremental offshoring, but it is dramatically higher than 4 or 5 years ago,” he adds.
Taking a longer-term view, Moser points out that offshoring took 60 years to unfold with the help of many consultants and has resulted in a net loss of about 3 million manufacturing jobs. “Reshoring, conversely, has been underway for about 3-4 years and consultants are just starting to get onboard,” he states. “The $500 billion+ trade deficit will eventually come down because our trading partners will stop shipping goods for worthless dollars. The question is whether the deficit comes down now gradually as companies recognize total cost and improve productivity or later dramatically when the dollar collapses. I prefer the former.”
Moser adds: “The key for faster reshoring is for companies to reevaluate their offshoring decisions using something like our Total Cost of Ownership Estimator, see that the true cost gap is gone in some cases and small in others, apply lean, automation, training, etc. to close the remaining gaps as costs continue to rise offshore. Given the difficulty of achieving cultural change, that process will only accelerate now if the media consistently reports on the reshoring successes. Companies followed each other like lemmings offshore. My job…is to shine a light on the cases that will motivate the herd to reevaluate and the tools that will help them decide to come home.”